How to avoid disruption: Disrupt yourself

If you want a cautionary tale about the dangers of ignoring potential disruption, look no further than Kodak — which saw its share price fall from a high of almost US$80 to less than 80 cents before it filed for bankruptcy.

One of the major causes was the rise of digital photography at the expense of film — and the kicker is that Kodak had invented the world’s first digital camera in the 1970s.

Why then did Kodak lag the digital revolution instead of leading the way? Because it didn’t develop the digital camera for fear of cannibalising its existing film business.

By extension, the traditional rule — that a new product must only be launched if it has a higher profit margin than the existing product — is now being called into question.

Other companies faced with disruption have reinvented themselves. The textbook case study is IBM, which moved from manufacturing computers to technology consulting — unfortunately it’s difficult to find too many other examples.

With Uber competing against taxis, Airbnb taking on hotels, and streaming services setting TV executives scrambling, it could be worth spending some time considering how to avoid disruption — and being taken by surprise.

Disruption and innovation are quite the buzzwords of the moment, but it’s easier said than done for existing companies.

Here are some questions you could ask:

What is the biggest failing of our product/service?
In what ways do we give our customers headaches?
How will our product/service be delivered in 100 years?
How could our competitors undermine our services?
Could another organisation disrupt our supply chain?
How do we reward willingness to take risks?
Are there any advances we know are technically possible that we are not using? Why not?
Do we have a culture that accepts fast failure as part of innovation, ensuring we have the time and capacity to pursue different, more successful innovations?
How do we change a "Why?" attitude to one of "Why not?"

The challenge is that it’s easier to identify potential disruptions, than to implement changes that could address them because that requires putting longer-term survival ahead of short-term profitability.

In my experience, if you want to be successful such change requires commitment from the board down.