Episode 60 – Your business will innovate or die
Why no business is safe
We are in the midst of a change more profound than any other in human history. Technology is the great disruptor but my guest this week Paul Broadfoot thinks that word is terribly overused and misunderstood, especially in business circles. Paul is a management consultant based in Melbourne and on today’s episode we get to the heart of what true disruption really is and how your business can innovate.
Disruption vs. Innovation
There is big difference between innovation and disruption. Innovation is when a new product enters the marketplace and improves upon existing designs. It may take market share away from competitors but doesn’t tend to increase the market overall. Disruption, meanwhile, is almost the exact opposite. Disruptive products tend to be inferior but are cheaper and tend to simultaneously capture both the existing market and expands the market to new customers. The best organizations do both. Uber is a perfect example of that. Uber’s product is cheaper and is adding people to the market who weren’t previously using other options. It’s better, cheaper and faster.
The sky is about to fall
Uber’s effect on the taxi industry is just the most recent example of a trend that is going to sweep through every industry imaginable. Disruption usually changes existing business models – it’s not usually a new product or service. Airbnb didn’t invent booking rooms over the internet – they flipped the hotel business model on its head.
Change is hard
The larger a business becomes the harder it is to change. The big impediment to business innovation isn’t the lack of ideas. Great ideas are everywhere. The challenge is to incorporate those ideas into an existing corporate culture that is often resistant to change. It’s easier to identify existing business models that your company isn’t using than to come up with a new one from whole cloth. You can identify your current business model in under three minutes and find another in the same amount of time.
Innovate or die
Change is coming to every industry and its going to be exponential. Not everyone is going to suffer – some people are going to be huge beneficiaries. Paul is certain that while there are going to be big winners and big losers it’s the broad middle that is going to be squeezed. Those bland, vanilla businesses are going to be in trouble. Consumers are going to benefit mightily from an economy that can deliver anything to them exactly as they want it. The problem is when some of those consumers are working for a business that is being disrupted.