Gihan Perera (pictured below) is a business futurist, speaker and author of the book Disruption By Design: Leading the change in a fast-changing world. In this guest post, Perera says disruption is like a summer bushfire warning – people don’t heed the warning signs until it’s too late…
As a life-long cricket tragic, I have spent many summer days over the last 40 years listening to ABC Radio’s live broadcast of Test matches in Australia. Of course, our long, hot summers also bring the danger of bushfires, and the cricket broadcasts are often interrupted by bushfire alerts broadcast to the local communities at risk. The alerts follow a similar pattern: When the bushfire is far away, residents are warned to leave the area; as it gets closer, the warnings also advise about road closures; and when it’s almost on them, the residents are told to stay inside and be prepared to defend their home.
I don’t want to diminish the danger and force of bushfires, but let’s use this as an analogy for how many businesses deal with disruption. Some take active measures early, others scramble to act as it gets closer, and others wait until it hits and hope they can defend themselves.
You know disruption is coming, don’t you? It’s taken down massive companies (for example, Kodak was the fifth-most valuable brand in the world in 1996, but filed for bankruptcy in 2012) and disruptors have transformed entire industries (for example, Uber with taxis, Airbnb with accommodation, Amazon with retail, and Apple with music). So it’s only a matter of time before that bushfire is heading for you. It’s not about “if”; it’s about “when”.
Broadly, the world is becoming “Fast, Flat and Free”: Everything is moving faster than ever before; we’ve broken down hierarchies and barriers; and things that used to cost a lot now cost a lot less. The disruptors are the businesses that can offer fast, flat and free to their customers. And the disrupted are the businesses still stuck doing the opposite – that is, Slow, Bumpy, or Expensive.
Customers want things fast: Immediate answers on Twitter instead of phoning a call centre, digital downloads instead of physical products, instant access to their data instead of having to request it, and a “live” dashboard instead of an annual statement. If your product or service is technical or complex, it’s slow, and that makes it vulnerable to being outsourced, offshored, and eventually automated by AI.
Customers expect flat organisations: Connecting with CEOs directly online, sharing public reviews instead of just providing private feedback, and having unlimited choice instead of dealing with a tightly controlled industry that makes up its own rules. If your industry is regulated, licensed, or controlled, that might have protected you in the past, but now it can make you vulnerable to nimble and agile competitors.
Finally, customers expect more things free or at a much lower cost: Free access in exchange for targeted advertising, special offers customised to their personal buying habits, a low monthly subscription instead of high up-front costs, and “freemium” options (free for 80 per cent of customers, but the 20 per cent who pay for the premium version make it sustainable). If you continue to be expensive compared to these alternatives, you will quickly lose customers.
Unfortunately, slow, bumpy, or expensive might already be baked into your business, and it might even be the standard in your industry. It’s exactly what happened to the taxi industry, which was slow, bumpy, and expensive, and didn’t have any incentive to do anything innovative. That made it ripe for disruption by ride-sharing services such as Uber, which addressed everything that was slow, bumpy, and expensive in the industry.
It’s not always easy to transform your slow, bumpy, or expensive organisation – especially if everybody else in your industry is just as slow, bumpy, and expensive. But if you don’t start making changes, you’ll be destroyed by the raging fire of disruption.