Disruption Mythruption

Make no bones about it, disruption is real. But it is being mismanaged, misunderstood and there’s too much FUD (Fear, uncertainty and doubt) being used in “marketing” disruptive services. Things like “disrupt yourself before you get disrupted by an unseen competitor”, or “disruption is the key to survival”. These may all be true, but they instill fear, and with the fear you get dollops of doubt.

Disruption may be real, but it is only one way to deal with rapidly changing competitive landscapes. The primary goal should be rapid change. Product lifecycles have been shortening drastically since the 70’s. Mostly this is due to technology. And of course, technological change is rapidly increasing – and it has been since the 70’s. These two trends are linked, and they are what should underlie your thinking. How can we get products to market quickly, and how can we take advantage of rapid technology change? Yes being “disruptive” is one way, but so are agile business practices, and some mundane technology practices like outsourcing and cloudifying.

“Agile” is not a methodology or a software development practice – it’s a mind-set. Behind that mind-set is a commitment to very short business cycles. The idea is to work big projects in increments, where every increment aims to deliver something of use to your organization, and preferably to your customers.

Disruption may be real, but it is only one way to deal with rapidly changing competitive landscapes.

Two overlooked agile practices are outsourcing everything that is not core to your business and putting your technology platforms (both applications and infrastructures) into the cloud. Current research shows that the main benefits of both are not cost savings but are the increase in your agility. Two ideas prevail here: Freeing up your business savvy minds to focus on improving services, satisfying rapidly changing customer needs, and radically improving internal processes. Also, by cloudifying and outsourcing, you remove the need to remain current on your technologies – cloud platforms for applications and infrastructures are driven by customers to remain current (or even create new cloud functionality) and outsource service providers are driven to provide the most cost-efficient services they can. It’s a matter of survival for them.

Also at play here is the principle of the “N of many”. While you have experience of your business and technologies, your sample size (N) remains at 1. This means you do not learn from the mistakes and breakthroughs of others. Your cloud and outsource providers have an “N of many” – all their customers. So when a catastrophic security failure happens in one customer, the provider resolves the issue and upgrades their processes, algorithms, and technologies for all their customers.

Two overlooked agile practices are outsourcing everything that is not core to your business and putting your technology platforms into the cloud.

This leaves your people free to think, experiment, implement and improve – all disruptive practices. A key to experimentation is lean start-up thinking. The concept here is that every innovation is an experiment. Success is about learning quickly. People talk about “fail early, fail fast” but that takes a negative view of the process. The idea is to test assumptions (Like: Will our customers pay for this service?). If not, your test hasn’t failed, it’s just told you what your customers won’t pay for. But if you do it properly, you’ll find out what they will pay for. The decision points in lean start-up thinking are: Do we stop? Do we change our approach? Or, do we continue? No failure here, just learning. And the ultimate success is where customers are prepared to pay for services that you develop with their cooperation.

The main difficulties with agile and disruptive practices are that they fall outside our concept of what many executives think “good business” is about. Where are the business cases, the projects, the budgets, the tracking and monitoring feedback loops? Where’s the leadership, and how do normal managers manage this fast-moving mess? It’s all there of course, it is just that most entrenched ideas will have to be challenged. And this is where the disruption occurs. We believe that if you’re going to disrupt, you should start inside your business.

We believe firmly that the world is changing too quickly, is too connected, and is too complex to manage in traditional ways. Survival is not too small a word here – “traditional” businesses are unlikely to survive. Flourishing businesses have outsourced, cloudified and are actively focused on agile, lean-start-up and disruption. Nike manufactures in over 700 factories in 42 countries. But it owns no factories – it has outsourced 88% of its revenue generation capacity. Instead of focusing on manufacturing details, it is now focused on disruptive thinking – how can we customize our products on an unprecedented scale, how can we print our shoes? But it can only do this thinking because it doesn’t have to think about non-core elements of its business.