To effectively run an organization, you have to be vigilant and constantly on the lookout for new products or services that come to market and threaten to steal your client base. The best way to protect your organization from a coming storm is to accurately assess the current state of your business environment, and compare the pros and cons of the goods or services you provide against those of potential threats or “disruptions” to your business. Disruptive innovations are those products that possess technological or business model advantages over their competitors. These advantages enable them to gain traction and maintain their industry status as they become more advanced and continue to gain market share.
HOW ORGANIZATIONS CAN ASSESS LOOMING THREATS
The authors of this article provide a basic framework through which you can accurately evaluate whether a threat is looming on your horizon, and if so, plan a strategic response accordingly. First off, identify the strengths of your disruptors’ business model, or their “extendable core.” What are your competitors doing really well that is allowing them to expand their market share and gain traction? Next, identify what your organization’s strengths or areas of competitive advantage are, and why consumers turn to your company to meet their needs. What aspects of your competitors’ “extendable core” may enable them to develop better products or offer better services, but in what strategic spheres might you still have a clear advantage? Finally, look to the future. What conditions could enable a looming disruptor to subsume your business and what circumstances might thwart or hinder its hostile takeover within your domain?
PRACTICAL EXAMPLE
Consider online grocers, for example. Consumers love that they no longer have to drive to the store, search for their items, stand on long lines and drive all the way back home again. With one click of a button you can have everything you need brought straight to your door. At the same time though, your local supermarket or grocery store serves its purpose for last minutes runs to pick up ingredients for dinner. Also, there’s something about being able to squeeze your tomatoes before you buy them that online grocers will never be able to compete with. Online grocers certainly have a clear advantage when it comes to nonperishable, staple items that people stock up on. However, the necessary changes to their business model that would allow them to meet consumers’ last minute shopping needs would destroy their competitive advantage.