Digital Disruption: How you can Disrupt and prevent disruption

Adopt an ‘Invest to Test’ philosophy to quickly abandon, pivot, or continue…

To increase and deepen our discussion on digital disruption (see our last post on the idea of Future Surfing), let’s look at how to leverage digital technologies and mind-sets to produce start up business opportunities within highly complex environments.

We’re living in a so-called “VUCA world”: characterised by Volatility, Uncertainty, Complexity and Ambiguity. Across just about all industries, we’re seeing product lifecycles shortening, technology change accelerating, and customers demanding ever-greater value from businesses.

In studying decision-making in VUCA environments, British organisational theorist Professor Ralph Stacey notes by using longer product cycles and little technological change, you can be rational and measured with their investments. We’ve the time to build comprehensive business cases, and run proof-of-concept and proof-of-value programmes, as we develop standardised services in fairly static markets. innovation strategy can “prove” the project before we start.

However in VUCA environments, where product cycles are short and technological change is fast, going for a traditional approach to decision-making actually gets to be a liability – potentially costing time, money and lost opportunity. Variables replace constants as our decision-making factors.

On this complex environment, decision-makers require to use Invest to Test.

Invest to check can be a dynamic approach… Begin with some well-founded assumptions, but remember that however confident you could be, they’re still only assumptions. Invest the smallest viable level of resources (financial, human capital, intellectual etc) in building real-world prototypes and services that can reliably test these assumptions. Here you’re trying to make variables “constant” (no less than for a time).

Let’s assume, for example, your customers would love you to quote competitor prices when presenting quotes in their mind. Don’t immediately dismiss this as irrational or contrary to best-practice. Test the belief: develop a prototype experience and give it to 50 of one’s most loyal customers. Ask for their feedback… Is it as useful as they believed it might be? Will it increase trust and loyalty inside the brand? Does it improve the customer experience? Would they even be prepared to buy such a service?

It’s essential to ask the right questions, to stress-test your assumptions and judge whether they’re valid.

From this point, you will find three options: to abandon the item or feature, to pivot it (re-cast it as being something slightly different and test again), in order to continue further incremental investments and cycles of user feedback.

The short answer is ‘not necessarily’. In precisely what your business does, we need to draw a clear, crisp distinction between two approaches:

Future-Proofing… fast-following your competition by looking into making sure you’re aware and prepared for industry change, positioned to quickly conform to new demands, however, not actually being the catalyst for change.
Future-Surfing… even as introduced inside our last blog, this can be about actively using the find it hard to the competition and inventing entirely new ways to solve customer pain points.

Interestingly, in McKinsey’s ‘The case for digital reinvention’ report, the analyst firm showed that fast-followers (future-proofers”) saw an average 5.3% revenue uplift as compared to the competition. The true disruptors (“future surfers”), however, enjoyed a 12.3% revenue improvement.

But the real goal is to unite both strategies into your organisation, using each one where it can make probably the most sense. As an example, you may apply future-surfing for the core areas of differentiation, and future-proofing for those more commoditised areas where you’re not planning to differentiate yourself. Adopting both strategies, and executing them well, `could generate revenue uplifts up to 18.6%, based on McKinsey.

For more info about business model disruption go to the best resource.