Corporations and business leaders often think that finding the next “big opportunity" - or shielding their organization from it - requires huge bets and risks. This erroneous belief often prevents firms from being proactive in finding new opportunities or improving their approach. They inevitably argue the time is not right for such a big endeavour. Years later, after having been disrupted by other companies and having lost their incumbent status, they often say “if only we had known we were about to get disrupted, we would have innovated...”
Clearly, misunderstandings about innovation are one source of this inability to hear disruption signals. Another, is that the individuals who are most likely to notice these disruption signals, have the least legitimacy to flag them.
Individuals on the periphery of an organization see disruption signals most clearly. Think of your salesforce interacting with customers everyday but being unable to relay their feedback because their issues don’t align with Leadership goals. Or those working in IT, who use cutting edge technology at home but have to revert to using clunky and outdated tech at work, and whose complaints fall on deaf ears.
Their ability to hear disruption signals might be because they are removed from the echo-chamber that occurs at the core of the organization. Or, because those on the periphery have less of an incumbent mentality. In either case, they are the ones who are most likely to see disruption coming. Problematically, they are also the ones who are least likely to have the legitimacy to flag that impending disruption.
At Strategyzer, we try to overcome that hurdle with our Disruption Risk Assessment. We combine an assessment of your business model performance, with an assessment of the trends that will impact it. By using an objective scale to assess disruption , we take the guesswork out of the equation.
We assess business model performance by examining the strengths and weaknesses of your frontstage, backstage, and profit formula. Within each section, we use sliding scales and guiding items to help test where on the scale your business model is. For instance, within the front stage, one axis we assess is that of product differentiation.
On our scale, the lowest score of -3 represents “Our products and services perform worse than those of our competition.” The highest score of +3 represents “Our products and services are highly differentiated and loved by our customers.” Depending how unique and important to your clients your product is, you will score higher or lower on this scale. We repeat this process with each block of the Business Model Canvas.
By assessing each component of your business model, you will determine where you are most vulnerable to disruption. This will also enable you to identify areas of growth within your business model.
We assess the business model trends impacting your business in a similar way: with trends impacting the front stage, the backstage and the profit formula. With the use of the sliding scale and guiding items, we objectively assess the likelihood of these trends causing disruption. One axis we assess, within the trends impacting the front stage, is that of market saturation and competition.
On our scale, the lowest score of -3 represents “New entrants are gaining traction with cheaper, better, or substitute products and services that may make our business model obsolete.” The highest score of +3 represents “Competition for our products and services is shrinking and our products and services are likely to gain traction and benefit from that.” Depending on whether your market is becoming more or less competitive, you will score higher or lower on this scale.
Thinking about disruption can be scary, and often leads to denial rather than proactivity. Even so, it is necessary to actively listen and watch for disruption signals. The knowledge that those on your organization’s periphery are most likely to notice those signals should encourage you to hear them out. By giving them the legitimacy to speak up and to flag disruption when they see it, you could save the future of your organization.
As always, disruption is of course a source of opportunity. Remember that innovation isn't about throwing your organization into the unknown overnight. It is about diligently and consistently testing out ideas, and using evidence based decision making to make incrementally bigger bets. This will ensure that you won't find yourself hoping you had done that incremental work in 5 years.
Download our Disruption Risk Assessment tool and determine how healthy or at risk your business model actually is.