25-04-2024
Disruption is the new reality of business
by Rajesh Nair
Ronnie Screwvala, the legendary Indian entrepreneur, who changed the media and entertainment business landscape in India, famously quotes in his recent book ‘ Dream with your eyes open’ – ‘Even if it ain’t broke, fix it’. He refers to the need for every business to constantly look outward and then inward to understand the cataclysmic changes happening in today’s world. No matter how well planned your strategy is , how able you are at executing it , you will perhaps needs to trash your business footprint periodically, to cope with the business model changes and the socio – economic scenario vagaries. You are today aiming at a dynamic moving target that keeps moving on a random path which defies your management and decision making intuition.
There has to deep thought behind some of the planning you do for your organisation. Disruption for the sake of it, is also very short term and myopic. You will need to have the urgency of disruption over the long term and not just the short term – spit and polish – measures, you take. Your investors and your stakeholders can’ be attracted with a series of mindless action that you can pioneer and call it ‘disruption’. We know that the best way to see our reflection is to watch ourselves in still calm and clear water. But there will never be ‘still’ water anymore. The water will be choppy, dark and riddled with ripples originating from everywhere. There is no time, when you can sit back relax and think – ‘Ok, now, let me disrupt!’. Whatever you do, you have to do it on the move!
When you look at today’s business, you have to look at both the headlines and the trendlines. Tremendous value is being created by companies like Facebook, UBER, TumBlr, Twitter , Alibaba, which defies the normal principles of business model and our traditional outlook to assets. These companies have not just edged millions of companies out of business, but have fundamentally changed human habits. A middle aged professional of today is at that very interesting cross road in his career, where he sees some of the value of her decades old experience of yesterday eroded , because the future course of business requires a new ‘quiver of arrows’. The younger professional has a reality in front of her, which needs to be understood very differently. Business history today has little to offer to understand this crystal ball of change. A recent data on publicly listed companies in the US, highlighted the fact that the average age of a company is fifteen years today!
So what does it mean to the professional, who is entering into the portals of business today? What skills should she focus to chart her career in the future? While there is no time tested panacea for the future manager, here are a few points worth considering.
Understand the basic purpose of your business
You have to be clear of the direction that you are taking and for that you need to clear of your purpose of existence. What service or product are your creating and what is its core purpose ? We say in consulting that you can be smart of about your solutions , proud about the gazillion credentials you have of assisting companies find shore in troubled times, but your core purpose is your client’s success. Nothing more , nothing less ! For that you have to know their business as well as they do and think about it much more than that they do. Your ability to give them insights and warn them of disruptions will enable you to become trusted business advisor.
Revise your concept of long term and short term
The business planning cycles have become much shorter. The longer the time horizon of planning , the more difficult to pre-empt the business changes around us. No one in recent times had predicted the Chinese currency devaluation. Just that incident, seemingly out of the blue , in one country in this globe, set off a series of chain reactions. Currencies across Asian countries hit a low , economics of raw material supply chains froze and the price of oil tanked again. This also mean the competitiveness of the oil producing and the oil using nations have changed drastically with severe and indelible effects on companies. Did we predict this? What then happens to the long term strategic roadmaps? Well, the long term has become short term like never before.
Radically look at scale and ideas
The capability to start a business and a skill required to scale it to a size are very different. Your ability to strategize growth and build your differentiators has to also be companies by the skill to keep an eye on disruptors and break through ideas. The speed of execution also become paramount as product and service cycles are shorter. Every product has a golden run but the length of the run is shorter than earlier. Your ability to maximise this run and quickly reorganise.
Know when to cut your losses
There is no shame in existing businesses that are bleeding due to disruptors around you. When you cannot cope with fundamental changes that have rocked your industry, you need to exit or perhaps use that challenge as an opportunity. The recent ascent of UBER, OLA are slowly obliterating the ,local cab vendor businesses. With deep pockets and a tested business model these applications based businesses has disrupted most of them. A quick short term measure a lot of them has tested is to lease their capacity – vehicle and drivers – to these companies. It will quickly help them cut their losses in the short term and think on what they need to do in the long term.
Understand the implications of digital
When a new technology is introduced, society must adapt. Larry Downes in his book ‘ Laws of Disruption ‘ refers to how a major technological change creates far-reaching ripples, consider the effect of replacing metal stirrups with “flexible leather” stirrups in Europe during Charlemagne’s reign. This simple innovation provided medieval knights with more balance, efficacy and deadly success. Essentially, the leather stirrup “saved Europe”. He says that “technology changes exponentially, but social, economic and legal systems change incrementally” and struggle to keep up. Digital goods are “nonrivalrous”: Multiple people can use them simultaneously. As the digital world converges with the analog world, conflicts occur.
In the end, we need to understand that the digital and material economies function differently.This information-based digital economy will follow five general principles according to Larry Downes:
- “Renewability” – You can renew data, but not exhaust it.
- “Universality” – Everyone can access the same data simultaneously.
- “Magnetism” – Information grows in value as more people absorb it, which, in turn creates a network effect, drawing more people who want to learn.
- “Lack of friction” – The more smoothly information flows, the more valuable it is
- “Vulnerability” – Criminals can harm or misuse information. They can destroy it,ruin it or steal it (as in identity theft). In this one sense, data is like physical goods.
Remember, it is no easy when you are travelling a path not traveled before. You need patience and perseverance to stay the course. To make what you do matter, you have to be incredibly innovative, diligently disruptive and assiduously open to change around you.
