Consider the case of human travel agents who were once consulted before trips bookings to foreign countries were made before digital disruption set in. The information below would serve as a guide for further analyses.
The above is a classic case of how far digital disruption can go. An ABTA Holiday Habits Report 2018, which tracked British holidaymakers’ booking behaviour in the last 12 months and their attitudes to planning and booking holidays in the 12 months ahead, found that 81% of people booked their holiday online, compared to 22% of younger ( mostly 8–24-year-olds) and older families who booked their holiday in store.
This suggests a shift towards booking online and the gradual elimination of the use of human agents to schedule overseas travels. Simply put, the migration of the business of travel agency online and the increasing power of customers indicates that people are:
- Now more knowledgeable about travel;
- Now more technology savvy and have better access to devices;
- Now get attracted by offers too lucrative to refuse;
- Are offered more choice than ever.
- Price is more transparent than ever.
Indeed, the above digital disruption in the business of travel agency could be extended to those of:
- Tax accounting where software such as TurboTax has eliminated tens of thousands of jobs previously available for tax accountants.
- Newspaper publication which has seen their circulation numbers decline steadily, replaced by online media and blogs.
- Traditional taxi drivers and livery companies have completely been decimated by digital players such as Uber, Lyft, Bolt and other car and bike sharing apps.
- Airbnb and HomeAway are doing the same for the hotel and motel industry.
- Jobs previously done by bus and truck drivers, taxi drivers and chauffeurs are gradually being taken over by driverless cars, such as those being developed by Google (GOOG).
- 3D printing is continuously proving a threat to the manufacturing industry where the technology is becoming better and faster and in a few years, maybe deplored to manufacture a wide variety of goods on demand and at home. This will diminish the importance of logistics and inventory management.
- Radio DJs are largely a thing of the past. Software now chooses most of the music played, inserts ads, and even reads the news.
- Farmers and ranchers previously made up over 50% of the U.S. workforce. Today less than 2.5% are employed in this sector. Yet, more food than ever is being produced in America due to the automation in agriculture and food production.
Indeed, the disruption is going to come, whether you in are the above-mentioned industries or not. According to research by the Accenture Institute for High Performance:
- Rapid and disruptive change is coming to your business, regardless of the industry in which you operate
- 75% of today’s leading brands will be gone inside a decade.
Getting ready for disruption would be the best thing that can happen to small businesses. Here are a few ways to stay alert:
Agility Will Allow Small Businesses To Survive
The best way to stay ahead of digital disruption is to stay agile. For a business to be agile means that it can move quickly, decisively, and effectively in anticipating, initiating, and taking advantage of change.
A Global Study of Current Trends and Future Possibilities 2006–2016 found that the best way of adapting to change is to develop organizations that are both agile and resilient. The report found that higher performing businesses tended to take a more proactive and opportunistic approach toward change.
‘‘…The average tenure of companies on the Standard & Poor’s 500 in 1958 was 61 years. That decreased to 25 years in 1980 and is just 18 years now, a number forecasted to dwindle to 14 years in 2026.What does this decreased lifespan portend for business?,’’ says Sasha Viasasha, content strategist based in Chicago. ‘‘Such a shortened lifespan points to the changing nature of business itself. The business cycle has shortened, and the accelerating pace of innovation — and competition — is disrupting the old linear model of business and replacing it with new, dynamic model. Today, agility rather than longevity is winning. In fact, characteristics that once contributed to corporate longevity and denoted a healthy culture, such as the ability to ‘stay the course,’ now could utterly sink a company.’’
Consider the five stages of a business lifespan, says Sasha:
- Seed and development — ideation, feasibility and fundraising
- Startup — product development, market testing, and iteration
- Growth and Establishment — improved cash flow, established customer base and brand identity
- Expansion — expanded offerings and new markets
- Maturity and exit — every idea or product reaches a crisis stage, a point where improvement plateaus, expansion is no longer possible, and profits reach a ceiling.
Now there needs to be added a sixth stage:
- Rebirth or return — in this stage, a company starts over again, reinvesting its resources in new innovation, she says.
Rahul Varshneya, co-founder of Arkenea, custom software development services for founder-led companies says the trick is to lean into technology rather than become consumed with fear, like forward-minded entrepreneurs in specific industries who love, not loathe, technological advance.
‘‘It’s time for you to get down and dirty and really investigate the demographics of your target audiences,’’ he says. ‘‘Find out what they want, what they need, where they’re getting assistance and how you can help them. By creating a psychographic chart for each of your prospective consumers, you can get a truer view of their personalities, attitudes, lifestyles, interests and so much more. Then, you can use this outline to make wiser predictions about their buying behaviors.’’
Innovate And Adapt To Technological Changes
The best way small businesses can also survive in the face of digital disruption is to innovate. Dr. John Kotter, a world-renowned change and leadership expert prefers small businesses to create a dual-operating structure that combines the best of both worlds.
‘‘Ultimately, great companies execute and disrupt at the same time. Often they disrupt themselves…Truly great companies like Apple, Google, Amazon, and Starbucks constantly find new ways to become relevant to us and remain an essential part of our lives. When analyzed closely, you can see that they are simultaneously executing and innovating. If there is not enough innovation, changes do not occur quickly enough, your people can lose their passion, your products can become outdated — and worse, your business can become irrelevant. Great leaders maintain the balance between achieving results today and innovating to seize new opportunities in the future. So if you want to avoid disruption — or even lead disruption — then you need to greatly accelerate the way you operate internally to keep pace with a rapidly changing world,’’ says Randy Ottinger an Executive Vice President at Kotter International and Professor of Leadership, Emeritus, at Harvard Business School.
The best way to adapt to this disruption, according to Robert Glazer, founder, and CEO of a global performance marketing agency, Acceleration Partners, is to put technology and data to work.
‘‘No matter what industry you try to disrupt or in what way you to try to do it, data and technology can be a huge help,’’ he says. ‘‘Technology doesn’t just revolutionize businesses, it changes how consumers behave in every aspect of their lives. If you track the market and note where interest in new technology is heaviest, you can likely foresee what areas are most ripe for disruption.’’
The most basic advice on adapting for small businesses would be to:
- Build a website and optimize your website’s search engine capacity so that your website can be crawled to the first page of a search engine. After all, the US-based search company, Chitika says 91.5% of searchers refuse to go beyond the first page of search results.
- Small businesses can also hop on the frenzy of social media advertising. According to Ewan Duncan and Eric Hazan in their article, Digital Disruption: Six Consumer Trends, “Social networking represents almost a quarter of all Internet time (up 10 percentage points since 2008) and reaches over 75 percent of all Internet users.”
‘‘It’s important to have in mind that that social media should not be used as a direct selling tool. It should be used to understand your customers and engage with them, ’’ notes Kwasi, an SEO-focused firm.
- Small businesses can also go mobile.
‘‘With more than 70% of Australians now using smartphones, and more than 40% of them making purchases directly from it, according to Our Mobile Planet, you’re missing out on a huge slice of the pie if you’re in e-commerce and operating without a mobile friendly site,’’ says Kwasi
Collaborative Partnership For Innovation
Small businesses can also survive technological disruption if they can partner with industries within their sectors, and where possible with the disruptors.
‘‘Companies that are better prepared for industry disruption are much more engaged in growing and broadening their ecosystem partnerships,’’ notes the Accenture Institute for High Performance. “They actively use this strategy to support innovation and research and development, as compared to only half of those who admit they are less prepared. Companies that are disruption-ready are a third more likely to partner with advertising agencies, innovation companies (26 percent more likely), design service providers (24 percent more likely) and even customers (26 percent more likely). They are also 36 percent more likely to collaborate with companies beyond their traditional industry boundaries, and 32 percent more likely to align with companies they consider direct competitors.’’
“In order to successfully navigate industry convergence and strengthen their network of alliances to build truly collaborative operating models, they must shift their mindset to compete as a ‘cluster’, not as a single company, creating shared value for their alliance partners and customers.”
Accenture Institute also goes to recommend tips for surviving disruption as follows:
- Do not face digital disruption alone. Deepen and broaden partnerships with customers, providers, and a diverse array of companies in and beyond your core industry
- Make yourself indispensable. Use your business’s focus and expertise to become a critical part of the integrated solutions that customers demand
- Embrace operational flexibility. Consider what business changes you will need to be more collaborative and open — both in terms of your processes and your employee mind-sets
Develop New Customer Segments.
Small businesses can also confront digital disruption by developing new customer segments, instead of just defending existing business lines through cost cutting, automation, or service improvements for existing customers.
Medialaan NV As An Instance
Medialaan NV, a leading free-to-air video broadcaster in Belgium, found out that there had been a shift in video consumption by youngsters to platforms such as Netflix or YouTube. In a bold response, Medialaan bought Mobile Vikings, a mobile virtual operator with attractive data plans.
The strategy: Transform itself into the leading online social video platform for Flemish teenagers. Medialaan not only has diversified its revenue base to include data plans but also has been able to reengage with a lost segment — the teens — and now advertises its television programs to them more effectively. It is one of the few traditional broadcast companies to grow its TV audience in the youth segment.
Start Off New Business Models.
‘‘Innovative companies are experimenting with business models intended to disrupt their own legacy strategies,’’ Jacques Bughin and Nicolas van Zeebroeck in MIT Sloan Management Review said. They gave an instance of how earlier this century, Schibsted Media Group of Oslo, Norway, observed something that most media companies saw in their newspaper businesses: Print classified advertising was beginning to dry up. Rather than sit idly and witness the erosion of one of its most important revenue streams, Schibsted pulled the rug right out from under its own feet by moving its entire classified business to a free online marketplace. Today, more than 80% of the group’s earnings come from commissions on sales from its consumer e-commerce platform.
READ ALSO: How Startups Can Partner With Big Corporations In An Era Of Fierce Competition
Give The Value Chain A New Definition
Commonwealth Bank of Australia (CBA) as an example.
Jacques Bughin and Nicolas van Zeebroek noted that when digital disruption started threatening CBA’s payment services business, Commonwealth Bank of Australia (CBA) confronted the disrupters once and for all. The bank moved from focusing exclusively on payment services to developing its Pi, an open payments platform that hosts an ecosystem of applications and devices for merchants.
The platform is open to third-party developers, and the bank developed for itself an Android-based point-of-sales terminal called Albert, which is fully integrated with the Pi payments platform. Equipped with a card reader and an integrated printer, Albert can be extended with dedicated apps, enabling it to do much more than process payments. Among the first adopters was Earthling Investments Pty. Ltd. of North Adelaide, South Australia, owner of wholesale fuel distributor Mogas Regional Pty. Ltd., also based in North Adelaide.
The company is using Albert at its fuel stations to process customer transactions, manage their payments, and receive sales data faster.11 Although the platform and its ecosystem contribute to the disruption of the traditional banking value chain, it also positions CBA to compete with digital entrants.
Similarly, while the mortgage side of the banking business is being disrupted by online search and home-financing platforms, CBA updated its digital value chain through an augmented-reality app that gives customers the ability to read a property’s sales history and community information by pointing their iPhone camera at the residence.
When they have found a property that they wish to buy, users can then file a loan application directly in the app, thus positioning CBA strongly against digital and incumbent competitors alike.
The Bottom Line
Imagine the hard work that comes with running a business, the burnt energy and the spent time, all guzzled up by fast-paced disruptive technologies? Although the general advice has always been that when businesses are faced with disruptive innovation the best and the most common-sensical things to do are to try and hold on to an existing market by doing the same thing better, or try to capture new markets by embracing new business models and technologies, a lot of businesses have gone into extinction due to a sudden ambush by mind-boggling, disruptive technologies. Only small businesses who understand these disruptions and can disrupt them could stand a chance to win.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.