Business rules: Disrupt or be disrupted

Arthur Marara Think Disruption!
Business is about driving other people out of business. This is an offensive statement to some people, but think about this statement carefully and check again if you are offended.

Emotions aside, how many businesses that you know closed down due to the coming in of new players and new technologies?

Your answer is as good as mine.

Several!

This is the reality of life you and your business needs to live with; someone is looking for ways to disrupt you out of business. Buckminster Fuller states a very interesting principle which will guide my article this week, “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.”

Disruptive innovation

Let me start by defining terms. Disruptive innovation is a term coined by Professor Clayton Christensen which refers to an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products, and alliances.

It is not every innovation that constitutes disruptive innovation. The motor vehicle for example, though it significantly changed the transport sector, was not disruptive because motor vehicles were considered expensive and only available to a few people.

Real disruption in the motoring industry came with the Ford Model T in 1908, which brought in an affordable vehicle which was made available to the mass market.

Henry Ford said of the vehicle: “I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for.

It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise.

But it will be so low in price that no man making a good salary will be unable to own one — and enjoy with his family the blessing of hours of pleasure in God’s great open spaces.”

Christensen observes that disruptive innovations tend to be produced by outsiders and entrepreneurs, rather than existing market-leading companies due to the fact that the business environment of market leaders does not allow them to pursue disruptive innovations when they first arise, because they are not profitable enough at first and because their development can take scarce resources away from sustaining innovations (which are needed to compete against current competition).

A disruptive process can take longer to develop than by the conventional approach and the risk associated to it is higher than the other more incremental or evolutionary forms of innovations, but once it is deployed in the market, it achieves a much faster penetration and higher degree of impact on the established markets (Christensen).

Admittedly I have taken a lot of time to lay down the ground work for the present article, but it is for a purpose. We need to be clear, on what we are talking about and the need for us to be seriously serious when it comes to innovation.

The future belongs to innovators

Do you know that you do not need capital to think? The world recognises innovators.

I often hear people say I can’t start a business because I do not have capital. You do not need capital to start a business; you need an idea to start a business.  Facebook was started by someone who did not have capital. Whatsapp was started by someone who did not have capital.

In fact Whatsapp was started by a person who had been declined by Facebook and Twitter. The people who have made it in business simply had innovative ideas they pursued confidently.

Thomas Bata set out to put a shoe on every person on planet earth, and his idea gave birth to the family business, The Bata Shoe Company in Czechoslovakia.

Boyd Dunlop irritated by the noise from the steel wheels set out to come up with a solution that would change the world even today, pneumatic tyres. This became the birth of Dunlop Tyre Company which lived beyond him, and has visible presence in Zimbabwe also.

Disrupt or be disrupted

R Buckminster Fuller’s statement is apposite; “You never change things by fighting the existing reality.

To change something, build a new model that makes the existing model obsolete.” This is so true, do not fight anyone! I have seen businesses fight other businesses.

I have seen people fight other people! What a waste! True, it’s a waste of time, and a waste of life. Do not invest your energy in fighting competition. In fact competition is not actually your problem.

The solution has been prescribed above, “To change something, build a new model that makes the existing model obsolete.”

This is the truth that business needs to run with, and also as individuals, need to embrace. Do not fight competition make it obsolete.

It’s very possible to be rendered obsolete. If you are not developing yourself you will be made obsolete. If I may rub it in, you can be absolutely obsolete if you do not develop yourself.

I want to illustrate this point using the R Buckminster Fuller quote, and a few examples.

VCRs

Growing up it used to be a sign of status to own a Video Cassette Recorder, not to mention a colour television. I remember my family owning one at a later stage in life.

Little before we enjoyed the ‘‘new’’ status, there was already a new model rendering a VCR obsolete and you know what the model was, “Digital Video Decoder” (DVD) which would play Digital Versatile Discs.

No one condemned the VCR; they simply developed a model which rendered a VCR obsolete.

PEGEUOT “emergency” taxis — I was still a ‘baby’ when these were being used in Harare as taxis or public transport. You might have used these in the 1990s where people would be squashed inside, and be dropped at the various places.

A few years later, “kombis” came, and sooner the Peugeots disappeared. Why? Someone developed a model which made them obsolete. The kombis themselves have been threatened significantly by the “funcargo” and “honda fit” of the “mushikashika” fame.

Though I do not use this mode of transport now, but my brief study of these people inspired a reality of creating a model which renders an existing one obsolete.

I grew up in Masvingo and ordinarily I would have some serious connections. I was told an interesting thing that kombis in Masvingo had actually been kicked out of business by the mushikashika guys who use Funcargos and Honda Fits.

The true solution to mushikashika is not actually fighting them; but to develop a model which renders mushikashika obsolete.

The mobile phone — there was a time having a landline on your home was a sign of success. I recall having to sweat to secure a landline for our home in Masvingo, but this was to be history with the coming in of the mobile phone.

Now everyone can easily communicate with ease, and with almost everyone. This became a serious challenge to Telone which for years had enjoyed the monopoly. Today Telone has come up with some very innovative products, and has pushed hard so that many homes are connected, and also have access to the internet.

Econet has threatened several companies even in fields which have nothing to do with communication. It shook banks with the creation of Ecocash. People can easily transact on their phones, transfer, receive money, and make payments and recently tollgates.

The tradition was one could only do these things when they go into a bank and fill in some forms. Telecel and Netone have similar solutions. The airtime vendor will soon be in trouble as people can easily get their airtime on their phones.

ZOL transformed the field of internet, and connectivity, and has been so aggressive in connecting several homes.

Internet is not a luxury it’s a necessity. When I moved to the place I am staying, I discovered that they had actually installed their cables even in areas where there were no houses. What was the strategy?

They made their presence felt ahead of their competitors, and you have an idea what happens if someone wants an internet service provider in the area. Why don’t we master the importance of speed and precision in service delivery?

Insurance firms have now been threatened by mobile telecommunications companies which are now venturing into insurance building on their existing customer base.

I was watching a documentary about Elon Musk the CEO of Tesla, and SpaceX who wants to launch hundreds of satellites so that everyone in the world can access the internet for free. Facebook even had such talk at some point in time.

They want to ensure that internet is for free to everyone. Their model is if successful will greatly affect those people who make money from providing internet only. Let’s wait and see.

Business is about driving other people out of business. Look at this statement and you will see how true it is. How many companies closed with the coming in of iTunes? Several, CDs became obsolete in other parts of the world with people preferring digital downloads.

This is the reason why we do not need worry about CD pirates in Zimbabwe; let’s develop models which render piracy obsolete. No one will ever buy from a CD pirate again.

Do you want to be an effective entrepreneur? Develop effective models that render existing ones obsolete.

Do not complain about a competitor who seems to have all the market, yet with an average product, develop a model which renders their model obsolete. Entrepreneurs are constantly looking for solutions.

Stop complaining start developing models. What are you going to do differently this week?

 

Source :The Herald

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