Disruption and Innovation

Necessity is the mother of invention to quote an old proverb. Disruption in business should be the mother of preparedness, creativity and innovation. Consider some scenarios:

· Disruption by natural disasters – When Hurricane Isabel was threatening to hit Virginia’s Hampton Roads area in 2003, a company made the conscious decision to suspend its data center operations in nearby Virginia Beach and transfer them to Florida, which was already out of harm’s way. By doing so, they avoided impending business disruption and assured their employees’ safety.
· Disruption by man-made disasters – Post September 11, 2001, financial services firm Cantor Fitzgerald, was able to recover and rebuild corporate capabilities because of the mirror site established at its data center in Rochelle Park, NJ.

Disasters are not the only type of disruptions organizations face. Disruptions occur in the business cycle and leaders have to be prepared for them as well. Case in point is the impact that companies such as Uber and Lyft are having on the taxi industry. These companies are luring both customers and drivers from the taxi companies, redefining transportation services. The disruption they are causing is wider and deeper. The taxi medallion has guided the industry in New York City since the 1930s. Anyone wanting to drive a cab had to own or rent a medallion. The market restriction and privileges of owning one lead to their astronomical value – $1.05M in 2013. Along comes Uber, taxis are no longer the exclusive transportation service, and the medallion value has now dropped to approximately $850K. How does this disruption get deeper? The assets of Progressive Credit Union in New York City, among others, are secured by taxi medallions. They’ve seen their incomes decrease and provisions for loan losses increase in 2015 as the taxi industry they serve struggles to survive economic and technological changes. One disruption has impacted two industries.

As a leader today it’s important to not only anticipate the impact of potential disruption, but to cause disruption. That’s right, become a disruptors. To do so:

· Amplify your strengths. Where are you above the competition today—what are your organization’s strengths? How can you shore them up and profit from your core?
· Redefine your business. Describe the business and the markets you’re in today. Now, if you were to redefine the business or market to create new opportunities for growth, how would you do it? What are the implications?
· Embrace value innovation. What are clients’/customers’ frustrations and complaints? How can you respond to these unmet needs?
· Leverage digital. What is your digital footprint? Can customers find you on-line and on mobile devices? Are you using analytics to make decisions?

As you begin to identify disruptive ideas, evaluate them. Determine where the ideas falls today and what it would take to move it to the next level.

· Are the ideas incremental – optimizing existing products for existing customers?
· Are the ideas next generation – expanding from existing business into new products or services to offer customers and clients?
· Are the ideas breakaway – products and services for markets that don’t yet exist?

Disruptive leaders build the business of tomorrow. They are focused on things that generate innovation and creativity. They are mindful. They encourage relationships with others. They listen and embrace other’s ideas. Disruptive and Innovative leaders move from discovery to execution.

 

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