Incumbents Are Always At A Disadvantage In Making Sense Of Disruption

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Disruption might be a buzz word in the industry, but what does it actually mean? Kai Riemer an associate professor at the University of Sydney chats with B&T about why disruption shouldn’t be applied to every change and why incumbents are screwed.

Riemer recently co-authored Digital Disruptive Intermediaries report which examined the ways in which digital disruptors challenge incumbents and what this means for established companies, how to find the opportunities that it creates and defend against the threats of disruption.

“Disruption has become a free-for-all,” Riemer told B&T. “Anything and everything is now being classed as disruption which is kind of missing the point of talking about the actual real disruptions which are far rarer then people would normally believe.”

Kai Reimer

“A disruption to an industry is a non-linear change, it’s a change that breaks the path on which an industry has been progressing and developing its products, ideas or understanding of the industry, what is a valuable product, what consumers want etc.”

For Riemer, disruption is about ‘disclosing new worlds’ for the consumer. “Disruption is not just incremental change but changes which let us recognise that there is a different world to be created.”

For example the MP3 fundamentally changed how we consume music. “An MP3 is still inferior in terms of sound quality compared to CDs, but it no longer matters. What matters now about music is that it’s instantly available, portable, mobile, and digital. It’s no longer bound to the CD medium.

“The disruption is our understanding of what ‘music’ is. So it’s not that the product has become better but the understanding of what is good and bad has changed.”

So how can incumbents battle against shifts in our collective understanding of a product?

“Here’s the difficulty for the incumbent: they cannot make sense of the disruptor because it’s against their understanding of what counts as the industry.” This isn’t the incumbents fault, it’s a very human flaw; “for the fish it doesn’t make sense to challenge the idea of the water, because there is no other thing than being in the water.

“So incumbents have a hard time making sense of the disruption and imagining that it could actually lead to a way of doing business that not just offers a different product but a completely different way of looking at your own industry.”

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Joshua Spanier

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