Disruption and the Big Bang - Article

Disruption and the Big Bang

Introduction

Disruptive technologies = Upstarts that offer cheap substitutes to existing products, capture new, low-end customers, and then gradually move upmarket to pick off higher-end customers, too. When these disrupters appear, it's time to act quickly—either acquiring them or incubating a competing business that embraces their new technology.

In this context, Big-bang disrupters = Entire product lines, and even whole markets are being created or destroyed overnight. Disrupters can come out of nowhere and instantly be everywhere. Big bang disrupters trigger disasters.

The differences

The first key to survival is understanding that big bang disruptions differ from more-traditional innovations not just in degree but in kind. Big bang disruptions are not only cheaper than already existing offerings, they are also way more invented and better integrated with other already existing products and services. Many of them exploit consumers' growing access to product information and ability to contribute to and share it. The biggest challenge to incumbents maybe is that big-bang innovations come out of left field, combining existing technologies that don't even seem related to existing offerings to achieve a dramatically better value proposition. Big-bang disrupters may not even see already existing offerings as competition. They don't share that approach to solving customer needs. And they're not sizing up existing product lines and figuring out ways to offer slightly better price or performance with hopes of gaining a short-term advantage. Usually, they're just tossing something shiny in the direction of customers, hoping to attract them to a business that's completely different from already existing ones.

The three devastating features of big-bang disrupters

• Unencumbered development ; Big bang disruptive innovations are often born of rapid-fire, low-cost experiments on fast-maturing, ubiquitous technology platforms. They don't need budget approval and aren't vetted before development begins. When cost is low and expectations are modest, entrepreneurs can just launch their ideas and see what happens.

• Unconstrained growth ; See Figure 1, graph of Traditional Technology Adoption vs. Big-Bang Disruption. Big-bang disruptions can be marketed to every segment simultaneously, right from the start.

• Undisciplined strategy ; According to many previous work of several researchers, businesses should align strategic goals along one of three value disciplines: low cost (operational excellence), constant innovation (product leadership), or customized offerings (customer intimacy). Failing to choose, said the authors, meant "ending up in a muddle." Big-bang disrupters, are thoroughly undisciplined. They start life with better performance at a lower price and greater customization. They compete with mainstream products on all three value disciplines right from the start.

How to survive big-bang disruptions?

Big-bang disrupters are rewriting the rules of industry after industry, and the new rules hold only until the next wave of disruption comes along. There's almost no time to adapt, meaning bold strategies are the only way to cope:

1. See it coming ; Learning to recognize the warning signs of disruptive innovation is key to survival. You need new tools to recognize sooner than your competitors do that radical change is on its way, and that means interpreting the real meaning behind seemingly random experiments
   Truth teller = Has talents that are based on equal parts genius and complete immersion in the industry's inner workings >> See article for examples (Steve Jobs, Bill Gates)

2. Slow the disruptive innovation long enough to better it ; The best survival strategy may simply be to ensure that disrupters can't make money from their inventions until you're ready to acquire them or you can win with a product of your own. You can't stop a big-bang disruption once its unconstrained growth has taken off, but you can make it harder for its developers to cash in

3. Get closer to the exits, and be ready for a fast escape ; It's up to senior management to confront the reality that even long-successful strategies may be suddenly upended, requiring a radical recreation of the business. To compete with undisciplined competitors, you have to prepare for immediate evacuation of current markets and be ready to get rid of once-valuable assets

4. Try a new kind of diversification ; Diversification has always been a hedge against risk in cyclical industries. As industry change becomes less cyclical and more volatile, having a diverse set of businesses is vital. >> See article for examples (Fujifilm)

Conclusions

You can't see big-bang disruption coming, big-bang disruption is the innovator's disaster. The impact of big-bang disrupters is certainly amplified for technology- and information-intensive businesses, but most industries are at risk. See article for examples.