Industry disruption is rarely caused by single factor and doesn’t usually happen overnight. But how can you tell if a technology or new idea threatens to disrupt your industry and what should you look for?
This article reveals how the rise of the motor car provided three invaluable lessons that are equally relevant today.
Lesson #1: Never make assumptions about customer needs
Henry Ford said “If I had asked my customers what they wanted, they would have asked for a faster horse”. When the car arrived, while there was an overwhelming need among almost every consumer group and a desire for change, it was not the need for speed.
Across the US and Europe during the late 1800s a significant crisis loomed. Horse manure was on the rise and threatening the very essence of urban life. In fact, in 1894 the London Times predicted that at current rates, London would be under nine-feet of horse manure by 1950. The troubles did not stop there.
Eric Morris (1) sums up the problem in three words - Filth, flies and fatalities. Horse drawn transport was a dirty, noisy way of moving things around and brought with it disease and unpredictability. Horses frequently ‘broke down’ after 100kms and if they weren’t too injured, lifting them up again proved to be problematic. If the horse was badly injured, it was usually shot on the spot and without a ‘removal vehicle’ to take it away, was left to rot where it dropped. It was easier to pick up the parts (than the whole horse), so street sweepers usually left it to substantially decompose before attempting removal. Further, despite their relatively slow speed, horse drawn vehicles led to substantially more fatalities than their motorised replacement. As Morris describes it, the horse-drawn cart “had an engine with a mind of its own”.
So coming back to Henry Ford's original question, a faster-horse would probably not have been the answer he received.
Think about your own organisation? Does it make assumptions about its customers' needs? Do your leaders really understand what drives the creation of value for customers?
Lesson #2: Adopt a customers’ perspective to see change ‘convergence’ and its potential impacts
In 1900, just over 4000 cars were sold in the US and by 1912 this number had reached 356,000. The car’s rapid adoption was the result of a number of simultaneously occurring environmental factors (see Figure 1).
Figure 1: How converging forces created an environment that was ripe for disruption
All of these created a ‘bubbling’ desire for change when the motor car came on the scene.
Think about your own industry. What are some of the major changes affecting your customers? How might those changes be converging and opening up opportunities for disruption?
Lesson 3: When something new comes along, look for the characteristics that make it easy to gain traction
The speed at which innovation is adopted is commonly referred to as diffusion (2). The rate of diffusion is influenced by factors associated with the innovation/product, and the target customers. To become popular, an innovation must first deliver value to customers by addressing needs and solving problems (like those described in Figure 1). After this, five key elements of the innovation itself, influence the rate of diffusion. These help to explain the rapid success of the motor car while also providing key questions to ask when assessing a potentially disruptive change (see Table 1).
Table 1: Five questions to ask when a new idea or innovation comes along (3)
Conclusion
In today’s world where we're surrounded by change, it can be hard to work out what’s relevant and what’s not. It's worth remembering that no innovation (regardless of how awesome its technology or how funky it looks) changes the world by itself. It needs to address burning customer-needs, be met with the right environmental circumstances and have the five characteristics that make it a ‘customer magnet’.
Therefore, the best way to be ready for inevitable industry disruption (or better still, create one of your own) is to fixate on customer-insights, be deeply in-touch with what’s changing in your customers’ environment and fiercely focused on creating customer-value. Above all, your organisation needs leaders who see the opportunity and have the drive, courage and capability, to take it.
About the author:
Kate Christiansen is an author, business leader and passionate change-advocate who's spent twenty years adapting organisations to major strategic change. Her writing aims to empower senior leaders by fostering insights, sharing ideas and providing practical strategies to succeed in an ever-changing world. Kate's latest book 'The Thrive Cycle: Unlock The Adaptive Organisation Within' will be released in 2016.
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References:
Morris, E From Horse Power to Horsepower, published in Access, Vol. 30, SPRING Edition, 2007.
Rogers, E. (2003) Diffusion of Innovation – 5th Edition, Free Press.
These questions have been adapted from E. Rogers Diffusion of Innovation Theory.