Go Digital or Go Home?

3d burger

Today, market leadership is no longer about having the best product, the lowest price, or even the best people. Becoming a market leader in any industry is now based on being able to capture new opportunities in a rapidly changing market.

Market disruption is a topical phrase but what does it mean?

Analyst firms have their view. For example, IDC predicts that by 2020 30% of the top firms in every business sector will not exist, as we know them today. They will be replaced by new firms, will have merged, will have not kept pace and declined, or will simply not be relevant any more to the business needs of the day.

At the sharper end of the market, last year Microsoft reported that nearly half of all UK leaders believe that their business models will cease to exist within the next five years.

An illustration of how the pace of change is accelerating can be found in Mitel’s recent ‘Digital Transformation for Dummies’ where the authors point to the declining length of time firms are spending on the Standard & Poor’s 500, often abbreviated as the S&P 500, a US stock market index based on the market capitalisations of 500 large companies having common stock listed on the NYSE or NASDAQ.
in 1960, businesses remained on the S&P 500 Index, on average, for 50 to 60 years; by the early 1980s, the average was less than 30 years.

As this trend is likely to continue, by 2025, businesses can expect to remain on the index for an average of only 15 years, as new market leaders continually emerge.

I often quote the real-life example of Kodak who in 1976 accounted for 90% of film and 85% of camera sales in America. In 1975 Kodak had developed a digital camera but because they did not seize that opportunity by 2011 they had filed for bankruptcy.

So, is disruption going to happen to you or because of you? It’s an interesting question and one that many stakeholders in Avaya must have asked themselves many times in the last five years.

Consider; if interaction means doing the same things better and innovation is doing new things then disruption is doing new things that make the old things obsolete! Disruption is the end of ‘business as usual’.

There’s no guarantee for any new technology or application but there are more ideas and suggestions for what will become disruptive over the short term that you can shake a stick at. Meanwhile, enterprises across the globe are attempting to protect their current market status by investing in the undertaking of a Digital Transformation.

Are there common attributes as to what makes a successful disruptor?
Many point to innovation and in particular, technology innovations. But not all innovations are disruptive in the short term. For example, the first automobiles in the late 19th century were not a disruptive innovation, because early models were expensive luxury items that did not disrupt the market for horse-drawn vehicles. The market for transportation essentially remained intact until the debut of the lower-priced Ford Model T in 1908. The mass-produced automobile was a disruptive innovation, because it changed the transportation market, whereas the first thirty years of automobiles did not.

Disruptive innovations tend to be produced by outsiders and entrepreneurs, rather than existing market-leading companies and a good example of this would be the Dyson vacuum cleaner.
As you would expect, the internet has spawned many examples of market disruption. When I was working for Lever Industrial I had a guy working for me that in a previous life was a salesman for Encyclopaedia Britannica. He was a door knocker working street to street selling heavyweight volumes of printed knowledge for vast sums of money. There were armies of such people doing the same kind of trade across the globe.

That all came to an end in 2001 with the launch of the free, online encyclopaedia Wikipedia. This was a disruptive innovation that had a major impact on both the traditional, for-profit printed paper encyclopaedia market such as Britannica (1768-2010) and the for-profit digital market – the best known of which was Microsoft’s Encarta (1993-2009).

Of course people still like books and there is a healthy market for printed material which is staging a renaissance just as vinyl records have become hugely popular again following their market disruption, initially by compact discs in the 1980’s and streaming in the 2010’s. In truth however, these re-emergent markets are small, but tasty, beer.

So, looking ahead, what technologies are being touted as future disruptors?
This is a difficult area to explore as everyone has an opinion and who is really an expert?

A visit to the Disruption Hub provides a current list of such opinions on likely candidates and some examples are pretty obvious picks whilst others seem a bit ‘off the wall’. The latter category are the exciting ones as far as I am concerned because who is to say they won’t take off and disrupt a traditional existent market?

Here’s a pick of those that piqued.

If 2016 was a breakthrough year for some of the technologies such as AI, VR, AR, Chatbots, self-driving cars which all took significant leaps forward in terms of their practical applications and adoption, taking many by surprise, then in 2017 it is definitely true to say that the robots are no longer coming- they are here, and they are taking jobs.

  • From Wearables to Implantables
    So what category would you place ‘Implantables’? Wearables have not really taken off – my Fit-Bit has been in a drawer in the office for the last six months. However, did you know that up to 50,000 people already have electronic RFID implants, and Intel now have a chip for controlling smart devices in the brain. Together with Elon Musk’s eye on building VR in the brain, 2017 could see the beginnings of increased activity and interest in ‘Implantables’. My first take on this is ‘why not?’ After all, who do you know that has a heart pacemaker fitted? My second thought centred on what BUPA would make of this if anything went wrong.
  • 3D Printing Gets Industrial
    With the speed and scale of 3D printing increasing exponentially in the last three years, it will soon move from being a tech novelty to a core part of the manufacturing and construction process in many industries. We will see giant 3D printers using additive manufacturing revolutionising the construction industry – creating structures in months which would previously have taken years. And look out McDonald’s – I’ve seen a 3D printed edible burger!
  • The Things Are Taking Over the Internet
    More and more ‘Things’ have become connected in 2016, with applications ranging from gardening, transport, energy, sport to farming and medicine. Connected Cars and Smart Homes are now all realities. Yet while it is in Smart Cities and Industrial IoT that significant changes to productivity, lifestyles and business models will be seen, in 2017, companies will still be grappling with the changes to consumer facing applications and navigating the data they produce.
    I did see a reference to something weird called ‘Robojournalism’ but discounted that immediately as being daft! Who cares if Associated Press has announced that it will begin using automated software to write stories for 10,000 US Minor League Baseball games not previously covered by the news organisation. Truly stupid and anyway, I hate baseball.

And the Channel?
There’s a difficulty in asking channel suppliers a question relating to what they believe will disrupt the market as judging by the response the majority tend to focus on incremental changes to their own products.

However, Zee Hakimoglu, CEO at ClearOne, has given the question some thought when asked, ‘How to recognise what may be disruptive?’

“It all starts with problems that need to be solved—and these usually have been ‘solved’. However, the solutions can simply be workarounds, ad-hoc fixes, ‘tribal methods’ passed from expert to apprentice, or even secret methods only known to the so called ‘expert consultants’ who offer to resolve the matter. There are also specialised gadgets and widgets designed to solve specific problems. But none of these so-called solutions are truly disruptive; they only incrementally get you to some eventual destination.

Disruptors take ordinary ingredients (nothing not found on Earth!) and approach the solution by eliminating the ‘work’ to get there. In the process, they often create a disruptive solution platform that extends to solve problems beyond the original challenge.

Volvo-self-driving-car

For example, Google became a disruptive common portal to search for information. The information posted on Google is not divine, not uncommon, not rare, not necessarily special, or inaccessible through other methods. Google came up with a method to short-circuit the information search. Google has extended well beyond its original capability and has become an information platform for all kinds of activities including shopping, maps, advertising, etc.”

Jason Evans at reseller Solar Communications says that such is the potential impact of disruptive technology, his company has unveiled a team dedicated to it.

As Director of Disruptive Technology Evans is currently championing SD-WAN as chief disruptor in the market and is seeing the impact as many businesses now adopt a ‘Cloud First’ strategy.

“Traditional Wide Area Networking solutions such as MPLS, while effective for communications within the Enterprise, do present challenges for Direct to Cloud communications, including performance, efficiency, visibility, cost and, the IT Manager’s biggest fear, Security.

SD-WAN provides ‘better than private line’ security and performance, and is set to rock the Wide Area Networking market as we know it. Resilient, more cost effective and with security benefits by the bucket load, it is also a superior quality.

It delivers QoS by recognising mission-critical applications and providing them with bandwidth and priority. It utilises dynamic path selection to send application traffic down the most effective path, or leverage multiple paths to deliver greater resilience and performance.

A number of customers across sectors including legal, professional services and manufacturing are already reaping the benefits of the solution and we expect there to be an explosion in uptake over the next 12-24 months, as businesses begin to recognise the return, security and performance benefits of the solution.”

Carl Boraman, Commercial Director at Tollring says disruption is part of the natural evolution of technology.

“Disruptive technologies or services are generally innovative or ground breaking. It sounds negative but is in fact positive and great for those new in a market.

Disruption is happening everywhere. We don’t always think of things as being disruptive because they’ve led to good changes. When you look back at the PC, email, mobiles and then the iPhone, they were all disruptive. The PC was disruptive but it also created new opportunities for new players. Look how Ebay and Amazon have revolutionised online and home delivery shopping.

However, it can hurt traditional vendors, those who are wedded to their traditional business models. For them, disruptive tech or services quite often means cannibalising existing revenues and forcing their teams to sell differently. These older players often find themselves in catch up mode such as Nokia and Blackberry.

The big disruptions today in both business and our personal lives are cloud computing and social media. Social media with chat and enterprise chat services like Slack, are becoming hugely disruptive in the workplace taking the place of email.

These disruptive technologies or services ultimately improve our work and personal lives and deliver the potential for new business models. For example, in the past to get hold of technology required payment in full and up front. With cloud computing, we have different business models that allow you to pay for things over time. Technology that was traditionally too expensive, such as Call Recording, Big Data and Analytics, and only accessible to large companies, is now accessible to smaller businesses.

And if your business happens to be a disruptor, it may open you up to competition outside your traditional market. With the cloud and social media, traditional competitors may no longer be your competitors; and the competition may now come from an international disruptor who can effectively access your customers and start selling similar services.

Ultimately, disruptive technologies and services allow new business models from new innovative providers who can deliver more choice and a more competitive, open market.”

Common attributes for a successful disruptor:
• Innovation – common amongst disruptive companies.
• Change – they always ask, ‘why do we have to do things the same?’
• Open – always looking for new delivery and commercial models – and often waiting for the technology to catch up to deliver something new and exciting.
• Adoption – it changes the way people work and socialise.

Charles Aylwin, Director of Channel and Public Sector at 8×8 notes that for a technology to be disruptive, it needs to fundamentally change the way businesses work.

“The shift of communications to the cloud is opening up new features that would never have been available with on premise systems. It allows teams to work more closely and effectively. For example, being able to answer calls and securely access systems from anywhere on any device allows staff to work more flexibly, regardless of where they or their business is located. The cloud is also reducing the need for costly on premise systems that need to be regularly updated or replaced, opening up advanced call and communication features to companies of all sizes, at a fraction of the cost.”

Ed Says…

I gave Charles Aylwin the last word as we needed reminding that the cloud has been a major disruptor over the last few years and continues to push aside legacy on premise solutions. But what is next? The lesson we can learn from Kodak is that digital disruption is an unstoppable force and to try and fight it is futile. Keeping an eye on the ball and knowing the signs of digital disruption emerging in your industry means you can get ahead of the game and work with the flow rather than against it. Not only does this prevent the wave of digital disruption from washing away your success, it can also lead to further growth and new opportunities for the business.