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Disruption is an opportunity to reinvent
Management

Dealing with market disruption

12/09/2017
By Jeremy Miller
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All markets face disruptive innovation at one time or another. How businesses redefine their relevance in the face of this disruption will determine whether they thrive, survive or die. JEREMY MILLER reports.

In today’s market, disrupters are celebrated and lionised. Companies like Uber and Tesla are held up as heroes but they’re anomalies. The chances are high that the businesses operated by readers of this column are not disruptors, yet are facing and dealing with disruption at every level from the wholesale channel through to the retail market which is, in turn, affecting the way customers behave.

Disruption was defined by Harvard Business School Professor Clayton M. Christensen as “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”.


"Disruption is 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"
Clayton M. Christensen, Professor at Harvard Business School

It’s a different way of doing something that’s been done one way for a long time, such as ordering a driver via Uber instead of a taxi via conventional means. This new method disrupts existing markets and forces businesses to adapt or perish.

And while the level of disruption on the international optometry markets is not large when compared to other industries, disruption is taking place by retailers such as Warby Parker through to technological advances in areas such as virtual frame try-on. These market shifts will continue.

Disruption demonetises industries

The recruiting industry is still reeling from disruption that occurred over a decade ago with the advent of online recruitment and social media. Job boards such as Seek.com.au, Google and LinkedIn tipped the balance of power in the recruiting industry away from traditional operators. In the 1990s, a staffing agency’s database was its competitive asset but today almost every resume is accessible in the public domain via LinkedIn.

This cheap and immediate access to talent had two devastating effects: firstly, it created a surge of competition as new technology reduced the barriers of entry into the industry; and secondly, it established a DIY movement because the technology advancements made it cost effective for companies to bring the recruiting function in-house.

Disruption sparks a chain reaction

Peter Diamandis, author of Bold, defines the three stages that follow a disruption:

  • Demonetisation – the removal of money from the equation

  • Dematerialisation – the removal of goods and services

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  • Democratisation – when costs get so low that the industry becomes free.

Now democratisation isn’t about to happen in the optometry profession but look at the map industry for a perfect example – a decade or so ago, people bought maps and street directories but that has finished now that everyone has access to GPS and Google Maps via their mobile devices. Maps have been democratised.

Disruption triggers a chain reaction. Firstly, it erodes the profitability of an industry (demonetisation) – Uber and ridesharing services are undercutting the taxi industry.

Secondly, as the bottom of the market falls out and businesses leave the industry, dematerialisation occurs – check out the travel industry where Expedia and online booking-services have largely displaced travel agents.

Finally, the industry just shifts to democratisation, offering services for free – Kodak, for example, did not survive the introduction of digital cameras and the democratisation of photography.

Dealing with disruption


"Dealing with disruption is like executing a strategy without a map. There are no lessons from the past to help predict the future. Businesses have to navigate in the present."
Jeremy Miller, Brand Builder, Keynote Speaker and Bestselling Author of Sticky Branding

Chances are most businesses will be on the receiving end of a disruption in one way or another. With the current pace of technology, disruption might occur multiple times during a business’ lifespan. Being on the receiving end of a disruption is disconcerting. Business owners are left wondering how they can compete when the rules keep changing.

Dealing with disruption is like executing a strategy without a map. There are no lessons from the past to help predict the future. Businesses have to navigate in the present. To do this, owners can start by asking three deep questions:

  • What does the business want?

  • What won’t change?

  • What conventions can be challenged?

These three questions help businesses see the playing field from a different angle so they can redefine their brands and value propositions.

Business owners must seek a new path to relevance. When an industry is going through the chain reaction of disruption – demonetisation, dematerialisation, democratisation – it challenges the very relevance of a business, which is why it’s crucial to evolve or risk extinction.

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