Why do companies get disrupted?
What do insurgent, disrupting companies need to do and say to win market share?
How can they fend off painful disruption for profitable disruption? How do they communicate through either path?
We are lucky enough to have worked with teams and clients who have dealt with these questions more than once. Though each case is as unique — whether it be in the energy, utility, retail, financial services, agri-food, technology, ocean sciences, automotive or post- secondary sectors — there are common factors in every case.
One such factor is the theory of disruptive innovation. It has helped us counsel organizations facing disruption, seeking to disrupt, and in how we go about our own business planning.
I won’t paraphrase what has been already been succinctly taught and explained:
Disruptive innovation…describes a process by which a product or service takes root at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.
The case studies are many:
- Netflix disrupting Blockbuster
- Robo-advisors and web-based services disrupting legacy investment managers
- Tablets disrupting desktop sales
- Certificate programs disrupting four-year university degrees
- Medical clinics disrupting traditional doctor offices
- My intent is to apply disruptive theory to a communications context.
Here are five lessons we’ve taken and applied to client challenges and opportunities using disruptive innovation theory.
1. Focus on ”jobs to be done”
“People don’t want to buy a quarter-inch drill. They want a quarter-inch hole.”
– Clayton Christensen, The Innovator’s Solution: Creating and Sustaining Successful Growth
Jobs to Be Done (JTBD) contends that customers don’t really buy products. They “hire” them to get a “job” done. Stretching the framework further, advocates/supporters/constituents/endorsers engage and give mindshare because they ”hire” an organization for a job, just as well as a customer can. This way of thinking puts the customer (or user, or audience) right at the centre of the strategy.
- What problem are they trying to solve? What “job” does the customer hire your organization to do?
- How big is the market, and is it growing? Do many people need this job done? Is this a common problem or a unique problem?
- Who is competing to help the customer do this “job”?
Organizations today still rely on a lot of demographic data to target instead of JTBD thinking. Consider the difference:
- Print journalism. Would newspapers be better off today if they focused earlier on going digital vs. retaining their print business? Yes. JTBD thinking could have transformed them faster if ”help me stay informed, fast” was their core mantra.
- Massive open online courses, or paid for digital courses. Most traditional universities are embracing this disruptive technology today, but it has taken a while. Could they have moved faster if ”help me with continuous and efficient learning as a professional” was at the centre of their strategy?
- Meal delivery services. Would the Blue Aprons and HelloFreshes of the world be so disruptive today had they made decisions based on demographics, instead of the heartfelt JTBD, ”help me save time and cook with my family again”? Without focusing on the customer job, they could have replicated the incumbent companies.
For anyone charged with a marketing or a communications strategy, or doing the research to underpin them, JTBD thinking and inquiry. can be the backbone that powers disruption, or the shield that fends it off (more background of JTBD thinking in a communications context here and here).
2. Frame strategy as deliberate or emergent. Not fixed.
Organizations love multi-year communications plans—a playbook to guide investment of budget and time. This kind of document is often presented to a board and executive, and depending on how prescient and dense it is, it collects dust or actually gets used.
The theory of disruptive innovation holds that ”strategy is not a discrete event. It is a process that is at work 24/7 within a company”, and that an organization can best ”think” strategically by focusing on deliberate strategic paths while also accepting emergent strategic events. The latter is an essential element of the theory.Building in a malleability and acceptance for emergent and unpredictable strategies—perhaps from a disrupting competitor—is important, wise and useful. It’s an antigen for bureaucracy.
3. New innovations and sustaining innovations can be different beasts.
Disruptive innovation breaks down and defines the act of innovating into three categories: sustaining innovations, low-end disruptions, and new market disruptions.This labelling in itself is helpful, as it gives structure to an ambiguous and overused idea. Applying further, understanding:
- If an innovation is novel vs. an improvement or
- If a disruptor can really transform an industry or is an incremental shift or
- What a company should do if a competitor is threatening the low-end of their customer base (the short answer according to disruptive theory: be careful of focusing too much on up-market clients, a stuck culture, and ceding the low-end) …is an immensely helpful start to answering this challenge. Disruptive innovation theory can help frame and structure what is really going on, and how organizational actions and communications can counter or propel these forces.
4. Incumbent organizations need to start inside…and often can’t disrupt themselves.
If bureaucracy is rigid and strategy is fixed vs. emergent and malleable, then you get case studies like Target’s failed expansion into Canada, or BlackBerry’s complacency when the iPhone landed.
If a company—no matter how old or entrenched—creates a culture of ideas, ingenuity, and change, you are more likely to get case studies like General Electric’s Fast Works, GM’s transformational resurgence, or IBM’s emerging leadership on blockchain. Established and incumbent organizations often fail to disrupt themselves or counter disruption, unless they reorganize, build a culture of change, and create offshoots that have the mandate to change the business.
This is a significant consideration for the C-Suite: Are the employees ready? What is their current mindset, and what does their mindset have to be to enact the strategic push of the disrupting or disrupted organization? Chances are, your (deliberate or emergent) communications strategy needs to focus on internal first.
5. Find and cultivate your diehards no matter what side of disruption you are on.
If an organization, no matter what side of disruption they are on, can’t recruit, engage, and identify customers/endorsers/advocates, then something essential is missing.
This might sound like a profound observation of the obvious, but it is often not top of mind. An organization can be tempted to disperse and dilute how it communicates by trying to please everyone, particularly in traditional and challenged industries, instead of committing to a purpose-driven story and offering what needs no explaining to a core group of diehards. We call these folks natural advocates; they get it. They are not a hard sell. They are looking for direction.
Think of the companies and organizations that do this brilliantly and the absolute focus they exhibit on their core constituents. Berkshire Hathaway, Apple at every new product launch, Disney. Think of the industry associations who do the same…or who fail to do so and are continuously hunting for relevance. Communications strategists (and corporate strategists) who fail to feed their base do so at their own peril, and it can be a core tenant of any plan to embrace or counter disruptive transformation.
Disruptive Innovation Theory: A Tool for Strategic Planning
I’ve said before that disruption is the conceit of our time. This is true; a reminder that the authors of the theory felt compelled to give years after its inception.
Knowing this theory will give you a greater appreciation for market forces, competition, innovation, consumer behavior, culture and leaders who drive change. Most importantly, understanding disruptive innovation will sharpen your communications counsel and actions for organizations facing these challenges, as well as help you do the same in your own business.