Scenarios for Becoming a Disruptive Competitor
In this article, Alan Braithwaite discusses the key triggers, opportunities and scenarios for competitive disruption
Becoming a disruptor is all about context
The classic quote on asking “how do you get to…?” is “I would not start from here”. But any business aspiring to become a market place disruptor or super competitor must start from “where it is now”; the greenfield approach is not an option.
There are eight triggers for a company to reassess its business operations model and develop a new trajectory of super-performance.
1) ‘Declining business performance’ – the classic burning platform; this is one of the most common contexts for such transformation.
2) Market growth is also a context for triggering change: when a company sees an opportunity to exploit growth in demand by changing its Business Operations Model to respond to that growth.
3) Market structure change is about the opportunity to change channels and delivery methods, perhaps disintermediating existing distribution.
4) Competitor actions; this is where there is a need to make a step change response to some combination of competitive pricing and service initiatives on the part of a competitor.
5) Technical innovations are a major trigger for Business Operations Model change.
6) Benchmarking which may have revealed a performance deficit; if sustained this may be threatening to business sustainability.
7) Complexity; when a company realises that it is struggling with complexity and is diluting its performance as a result.
8) Market place social and environmental pressures that the company chooses to reflect.
These triggers of the development and adoption of a new business operations model occur in some combination for a company to be motivated to act – commonly more than one, but seldom all. The context for the change helps to determine the route to and shape of a new business operations model.
The 4 opportunities for disruption
These contexts combine into four opportunities for a company to reinvent itself and become a super-performer.
1. The first is the classic burning platform – this is where business performance is declining, sometimes rapidly. At the same time the company’s markets may be changing sharply or aggressive competitors have established new offers, possibly with the help of new technology. Clearly if a company is on a burning platform, it has itself been disrupted, either by the market or competitors or its own poor performance.
In contrast, the other three narratives are the potential disruptors, creating burning platforms for others.
2. The second is the model opportunity, where a change in approach to the market can lead to becoming a disruptor. It is most likely to originate from market structure changes or the ability to create them.
3. Third is the market opportunity, where market growth is driven by some combination of economic trend and technical development.
4. Finally the opportunity may be a hybrid of some combination of a burning platform with either model or market opportunities. This is about companies being in some trouble and then being able to grasp the opening presented by a structural or technical change.
Scenarios for disruption
We have observed four narrative themes for achieving disruptor status.
• The most universally agreed is that technology is a major component of being a disruptor. Indeed digitisation is the 21st century’s steam engine, enabling radical business model re-design across all its elements. The essence of being a technological business disruptor is that the application enables customers to do more with less, disintermediating, saving time and money or increasing capacity; the technology is the means and is not of itself disruptive other than the products may make previous models obsolete.
The other three scenarios are less visible but no less of an opportunity in their disruption potential.
• Changing market channels to dis-intermediate established routes to market and re-intermediate them with lower cost and higher service models can transform performance, building both growth and margin. Classic among these models is the idea of Service Dominant Logic, made famous by Vargo and Lusch, where companies move from selling things to selling the value of usage. The diagram shows this in concept, adapted from Vargo and Lusch.
• Competing through the basics is another scenario that can yield remarkable gains. This is about eliminating waste and maximising the performance of the operating system; remarkably many companies are leaving a huge amount of margin on the table that they could plough back into better service or prices. This can come from mastering complexity or lean programmes to cut out waste from excess stocks and consequential margin erosion.
• The fourth scenario for disruption is about optimising the business model; but this is not about conventional optimisation, it follows the holistic principle proposed by Eli Goldratt when he wrote that: “The sum of the local optimums is not equal to the global optimum”. The maxim of this optimisation scenario is “don’t ride the curve, change the game”. This may result in totally changing the scheduling and planning model or eliminating unprofitable customers or products.
Identify your trigger for change and chose your disruption scenario
“Business Operations Models – becoming a disruptive competitor” by Alan Braithwaite and Martin Christopher helps the reader to look in detail at what can trigger the need for transformation and where and how to look for opportunities to take a big step to improved competitiveness or, better still, disruptor status. There is no question that most companies have 5% to 10% of margin to be liberated that can be ploughed back into improved service or lower prices. That in turn will drive growth and profitability.