Responding Effectively to Disruption as an Organization

First, a quick recap of the idea: “Disruption” describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others. Entrants that prove disruptive begin successfully targeting those overlooked segments, creating value in new and innovative ways – frequently at a lower price.

In the Nigerian market, we continue to witness shifts in industries and the emergence of new disruptive companies creating value in new and innovative ways from banking, to retail, insurance, health, logistics etc, and taking market leads.

Disruption focuses on creating, refining, reengineering, or optimizing a product/service, role/function/process, category, market, sector, or industry. The most successful companies incorporate disruptive thinking into all of their business and management practices to gain a competitive value proposition. Established incumbent businesses fight to eek out market share in an attempt to survive, while entrants become category dominant brands ensuring sustainability.

So why do so many established and often well-managed companies struggle with disruption? Many times, it is simply because companies have been doing the same things, in the same ways, and for the same reasons for so long, that they struggle with the concept of change. There is something seductive about success. It lures people into doing the same things that made them successful in the past.

There are examples of companies throughout history and across every sector that have either failed to respond to disruption or have failed to maintain their once disruptive edge. Let’s look at a few notable examples of what happens to companies that become complacent. Why didn’t Nigerian banks see paystack & Paga coming? Why didn’t Folgers recognize the retail consumer demand for coffee and develop a Starbucks type business model? How did the brick and mortar stores let Konga and Jumia get the jump on them? The answer is quite simple… The established companies become focused on making incremental gain through process improvements and were satisfied with their business models and didn’t even see the innovators coming until it was too late.

Here are ways organizations can respond effectively to disruption;

1. Be Clear: What is the disruption shaking your market?
2. See and frame disruption as both a threat and an opportunity for growth.
3. Respond with a sense of urgency.
4. Defend your core business and attack the disruption.
5. To come up with ideas about what to do, forget your core business and think like an entrepreneur.
6. Avoid imitating the disruption. Instead disrupt the disruptor.