Disruption has worked its way through every sphere of our lives.

The theory of disruptive innovation was first posited by Harvard Business School professor, Clayton Christensen in 1995. According to Christensen, the term describes the transformation of business models and value networks by technology or business innovation

The rapid acceptance of disruptive innovations has led to a growing awareness in the business community that disruption is ubiquitous and accelerating.

In Zimbabwe some of companies or businesses  that used to command a lot of respect and market share have either gone bankrupt, been acquired or ceased to exist as the wave of disruption has been gaining momentum. This is not only true in this country but is also happening all over the world.

These are challenging times for companies as the speed, volume and complexity of change intensify. While there are several reasons for companies vanishing from the radar or going bankrupt, technology disruptions are playing a big part in amplifying this development. One critical manifestation of this heightened volatility is the emergency of technology-driven start ups across multiple sectors. It is amazing to see how some youngsters some of whom are college drop outs in this country are developing some very innovative ups.

Digital innovation is shaking the core of every industry and incumbents are struggling to respond. In the past two decades the definition of disruption has expanded far beyond its textbook meaning - the transformation of business models and value networks by technology or business innovation.

It is increasingly evident that disruption does not stem solely from technology or business innovations – it is also influenced by demographic shifts, globalization macroeconomic trends and more.

Root causes of disruption.

There are different root causes or forces of disruption. These forces are technology, globalisation and demographics. While these forces are not new, they have evolve in successive waves and it is these new waves that generate new megatrends.

While we usually think of disruption in the relatively recent context of IT, advances in technology have been disrupting business models for centuries. Successive waves of the IT revolution for example (PC, online, mobile, social) have democratized data, empowered consumers and spawned scores of new industries. The next waves - the Internet of Things (IoT), virtual reality, AI , robotics- promise to be even more revolutionary.

Like technology, globalization has accelerated in recent decades thanks to trade liberalization and emerging market growth. These trends disrupt existing business models by creating new competitors, reordering supply chains and lowering price points.

Throughout human history, demographics have determined destiny. In the coming decades, relatively high birth rates will make Africa and India engines of economic opportunity. Aging populations will transform everything from health care to real estate. Millenial dominated workforces will increase cities’ economic and public policy clout, even as it strains their ability to grow in sustainable ways. Migration and immigration will have profound impacts on workforces and economic development. All these demographic shifts will require new strategies and business models.

Why Businesses struggle to respond to digital disruptions.

Incumbent companies typically fall victim to disruption. They dismiss the initial disruption of their industry because it appears inconsequential relative to established products and services and fails to meet the needs of existing customers.

However a small core of customers, usually embrace the disruptive offering, giving market entrants a toehold and the offering  improves more quickly than incumbents expect.

Its capabilities soon surpasses those of the prevailing product or service  - at which point existing customers, who have so far resisted the offering, adopt it en masse.

By the time the incumbent now scrambles to move into this new market, it is often too late especially if the space has significant network effects or switching costs.

In most organizations, decision cycles lag technology cycles. However, that is not the only reason why incumbents struggle to respond to digital disruptions. Below are some of the root causes behind incumbents’ slow responses:

Slow decision Cycle

Old school approaches to designing change such as annual strategy meetings are too cumbersome for a non linear, fast paced digital world. Technology cycles are becoming shorter than corporate decision cycles as technology progression accelerates. Organisations are finding it increasingly hard to match the pace of rapid technology changes. The days of waiting for one strategic retreat for the whole year in Nyanga or Victoria Falls or wherever are gone. The environment has become very dynamic and things are changing everyday.

Complacency about Existing Business Models

One of the biggest challenges in responding to disruption is complacency. When disruption strikes, companies find it difficult to keep pace with the fast moving and changing world as they cling on to the old successful business models. Most business tend to hand on to primitive and tired business models that are no longer relevant to the current needs of their target audience. One key reason for organizations becoming complacent is management inertia- failure to sense the need to change. Some suffer from what can be called RC Syndrome- resistance to change syndrome. No wonder some of these companies are dying natural deaths.

Threat of cannibalization of existing business.

The threat of cannibalizing existing business can prevent incumbents from going to market with innovative offerings. A well known example is Kodak who was an innovator in photography who invented the world’s first digital camera in 1975. Despite its solid lead in the film business, it failed. Kodak had most of the patents for the digital photography technology, but didn’t commercialise them aggressively as it feared cannibalization of its film business. A company that has embraced cannibalisation as a very successful business strategy is Apple. The company has launched a variety of products that have cannibalised one another.

Loyalty to traditional lines of margins

In industries where digital business has lower margin than traditional business, taking the digital path is often perceived as a significant bet on the company’s future revenues. Incumbents hesitate to take the plunge. They would rather stick to their traditional lines of revenue which they are familiar with. The newspaper industry for example has largely depended on advertising revenue to subsidise low subscription revenues. To transition to digital, where advertising rates are a fraction of what they are on print, has a significant impact on profitability. This can blind management of the potential opportunities of digital for new business models and sources of revenue.

Misalignment of resources  to opportunities

In most organizations, people are treated as resources tied to divisions, products, services and business units. Managers are typically reluctant to let go of resources assigned to them for fear of any potential diminishing of their authority. Similarly, organizations tend to try and retro-fit new opportunities into existing organizational structures. These political challenges

pose significant hurdles when it comes to digital disruptions that, more often than not, cut across the entire organization.

Why responding to disruptions is so critical

Business’ response to disruption is perhaps the most important strategic imperative facing companies. If you think you won’t face disruption, it’s not because you won’t- it is because you don’t yet know how it will happen. It is very important that you fully understand the myriad ways in which your organisation could be disrupted. It is also very easy to under estimate the pace of change. Someone once said in retrospect all revolutions seem inevitable. Before hand, all revolutions seem impossible.

Smart strategy and execution are not enough. It may sound counterintuitive, but organizations get disrupted not by doing the wrong thing, but by doing the right thing. The long list of companies that have fallen victim to disruption includes firms that dominated their industries for decades.

They were often ruthlessly competitive, relentlessly focused on the market and led by competent strategic thinkers. In many ways they succumbed to disruption not despite, but because of that focus. Organisations are typically structured and incentivised to focus on fulfilling the needs of their existing constituents – binding them to disruptive opportunities, which often do not initially meet those needs. The strategy that got you here may not be the one you will need for the road ahead. It is important to ensure that you are realigning incentives and structures around disruptive innovation.

How do businesses take advantage of the disruption?

As disruption becomes evident, organizations have become more proactive in addressing the challenge. With the right response, disruption offers tremendous upside to firms that can harness its forces.

Taking advantage of disruption, requires both learning from those who do it well and being aware of the constraints that companies face formulating their responses. Companies in the technology sector are laser focused on creating disruptive opportunities. It is an industry where you can’t afford to be casual in your success. It is only the paranoid who will survive. Without exception, the titans of technology are obsessed with getting into each other’s business because they understand how the threat of disruption is.

However the fact that your business may not be in the technology sector does not mean that you should just ignore the waves of disruption. It is therefore important to ensure that your business has a formidable digital platform upon which all your strategies revolve if you are to survive in business today. The focus is on how you can use technology to transform your business.

While there may not be any guarantee for success all the time, companies know that this single minded focus gives them their best shot at remaining relevant in the long term.

Concluding Remarks

Companies looking to disrupt their business models could start by asking important  questions such as: How can we set the right tone at the top? What rigorous processes should we institute? What metrics will encourage experimentation?

These are all good questions. But one can argue that the starting point is elsewhere. When disruption upends incumbent business models, it challenges many of the most basic assumptions underpinning those models. The first, and most important, step in self-disruption therefore involves challenging long-held assumptions about matters as fundamental as what your business is and who your customers and competitors are. Don’t hold on to your traditional ways of running a business. Instead move with the times.