Industries that have seen the impact of disruptors now focus on defining what will be the next disruption before it happens. But, knowing when the change will occur is a challenge – and one that could leave your enterprise out in the cold if you’ve got your timing wrong.
You’ve seen new disruptors suddenly take off, while others take years to come to fruition: Just think of the popularity of Uber, Airbnb and even social media platforms like Snapchat and Periscope.
Realising the impact that these disruptors can have on industries, enterprises now continue to scan the horizon for the next ‘big thing’. But, understanding exactly when they will impact your business could seem more like an art rather than a science.
So, how do you ensure that your enterprise is ready for the next revolution – instead of missing the train entirely when it steamrolls through your sector? How do you ensure that you don’t prepare too soon for the next big change, exhausting all your resources and potentially crippling your business?
“Few modern firms are untouched by the urgency of innovation. But when it comes to strategising for a revolution, the question of ‘whether’ often drowns out the question of ‘when’. Unfortunately, getting the first right, but not the second can be devastating. Right tech, wrong time syndrome is a nightmare for any innovating firm.” – Harvard Business Review
According to HBR, enterprises need to understand why some new technologies are adapted to quicker than others, while others catch on gradually. To understand this, you need to take a deeper look at two key areas: (1) the broader ecosystem that is supporting the new technology; and (2) the competition that may take place between the new and old ecosystem.
HBR unpacks how analysing these two areas can help you to predict the timing of disruptions in your industry:
1. Understanding the broader ecosystem
How dependent is the new technology on other innovations?
When assessing whether the next tech has the potential to revolutionise an industry, enterprises should consider whether the technology is able to satisfy the market’s needs. To evaluate the potential, consider:
- Is the tech currently ready or will it require additional development?
- What are its production economics?
- Is it price-competitive; and most importantly,
- Is the technology dependent on other innovations?
“The strength and maturity of the elements that make up the ecosystem play a key role in the success of new technologies – and the continued relevance of old ones,” explains Ron Adner and Rahul Kapoor, authors of HBR’s article Right Tech, Wrong Time. A new technology that can plug into an existing technology has a low dependence on other innovations, however some tech will not gain traction if it is dependent on the creation or adaption of another tech.
Take for example HDTV, which could only gain traction once HD cameras and production of HD videos became commercially viable.
2. Analysing the competition between ecosystems
“When a new technology isn’t a simple plug-and-play substitution—when it requires significant developments in the ecosystem in order to be useful—then a race between the new- and the old-technology ecosystems begins,” explains Adner and Kapoor.
Adner and Kapoor have created a framework to assess the timing of disruptive change in an industry, with four potential scenarios at play:
1. Creative destruction
When last did you send a fax? Fax has virtually been replaced by email, and email could be disrupted very soon with the rise of collaborative real-time platforms such as Slack. This is what Adner and Kapoor term “creative destruction” and occurs when the new technology reliance on the ecosystem is low, allowing the new tech to very quickly disrupt a previously established industry.
In these instances, there are pockets where the old tech still continues to serve a small market (most printers still have a fax functionality), how the majority of the market abandons the old tech quickly in favour of the new disruptive tech will make a big difference.
2. Robust resilience
Contrastingly to creative destruction, robust resilience occurs when the new tech encounters challenges to its emergence, while the old technology ecosystem still presents opportunities to improve. Think of retail’s initial implementation of RFID devices that faltered and were also slow to be adapted across the retail industry, because of the need to deploy adequate IT infrastructure across stores.
However, this has led to an increased focus on the existing ecosystem – IT infrastructure, which has increased the focus on deploying IT resources across the industry. As a result, RFID devices are now re-appearing as a tech that is finally able to deliver on what it had hoped – the promise of storing richer customer data.
3. Robust co-existence
“When the ecosystem emergence challenge for the new technology is low and the ecosystem extension opportunity for the old technology is high, competition will be robust,” says Adner and Kapoor. “The new technology will make inroads into the market, but improvements in the old-technology ecosystem will allow the incumbent to defend its market share.”
This will result in a period where the old and new tech co-exist. An example of this is the introduction of tablets to the mobile / PC environment. Although tablets can do the same thing as a mobile – including calling and messaging a contact from the tablet – at the same time mobile phones have improved to become ‘smarter’ phones, enabling users to access the Internet and view documents easily from their devices.
4. The illusion of resilience
When the new technology faces high challenges from the ecosystem and the existing ecosystem doesn’t offer the old tech an opportunity for improvement, the new tech will not be adapted to, until these challenges have been resolved.
“Examples here are HDTVs versus traditional TVs, and e-books versus printed books,” Adner and Kapoor explain. “Both of those revolutions were delayed not by advances in the old technology’s ecosystem, but by ecosystem-emergence challenges in the new technology.”
In this instance, the old tech will still maintain a sizeable market share, however growth will have stagnated. The old tech is therefore in a precarious position, because as soon as the ecosystem challenges are resolved, the new tech will dominate the market.
HBR advise that you consider the following before analysing new and existing technology ecosystems within your organisation: