Productivity and profitability: how disruption creates opportunity

Thursday, 19 August 2021 12:25

Productivity and profitability: how disruption creates opportunity

Guest Opinion: The theorised phenomenon of disruption is defined as a process whereby a product, a service or a solution disrupts the rules of an already established market. 

Disruption is not new and, historically, repeating patterns of massive disruption have occurred regularly. Today's digital revolution is like major phases of disruptions of the past, such as the agricultural revolution and the development of canals and railways. Technological progress, along with the globalisation of trade and demographic changes, helps to spread these revolutions to every sector of the economy. 

The Austrian economist Joseph Schumpeter identified the theory of creative destruction back in 1942. He described the deliberate dismantling of long-standing practices to make way for innovation and improved methods of production. He observed Henry Ford’s assembly line as a real-life example of creative destruction, fluctuating dynamics constantly reshaped or replaced by increasing innovation and competitive circumnavigation. 

History also demonstrates that, when a transformational technology appears, it is accompanied by an incredible upsurge of associated energy. This energy creates a tsunami effect, stimulating change, driven by out-of-the-box thinking and unblinkered vision. 

This energy is now driving the rethinking of professional services organisations’ key values: clients; competition; data; and innovative remodelling of vision. 

·        Clients: Thinking must be laser-focused, treating clients as key influencers, creating an omnichannel experience reflecting their changing demands. 

·        Competition: Traditionally, competitors mirrored each other’s organisations, but this is no longer the case. For example, Tesla was initially an energy company, then a vehicle manufacturer, and now a space travel visionary. Co-opetition (competitive cooperation) is occurring more often and even forming a critical part of many business partnerships. 

·        Data: An organisation without full control or ownership of all its metadata devalues one of its key strategic assets. The inability to fully unlock or create a complete 360 depiction of customer insight and strategic value can cost business opportunities and dull the business’s competitive edge. 

Continuously evolving the value proposition is critical to every business. Defending businesses with barriers to entry are now perceived as almost futile. The key is to communicate with customers, learn about their vision and associated demands, and support the alignment of new propositions to become a trusted advisor/partner for tomorrow. This will let businesses create experiences that stimulate customer demand while energising the whole organisation to share in this newfound stimulus. 

If businesses can engage this energy and refocus on genuinely better ways of organising and deploying responsive business processes, they can use disruptive energy as a catalyst for success. 
There are three focus points for energy resurgence: 

1. People
Energise and evolve teams with the right skillsets and establish a culture of empowerment to embrace disruptive change, and use it as a springboard for success. 

2. Process
Review business process responsiveness and efficiency. Focus on shared corporate intelligence, and introduce smart approval pathways and information flows to increase communications, compliance, and governance. 

3. Technology
Let people and processes work seamlessly as a single core, establishing an infrastructure that removes wasted time, maximises resources and allows people to work effectively. 

People always tend to think that a tough economic situation is the sign of a new normal and, conversely, that a robust world economy will last forever. But, as history has shown, economic conditions always alternate and technological revolutions (disruptions) are part of the business fabric. 

At the heart of this trend is the fact that today’s disruptors will surely become tomorrow’s disrupted. The process invariably results in losers and winners. Entrepreneurs and workers in new technologies will inevitably create disequilibrium and highlight new profit opportunities. Producers and workers committed to an older technology will be left stranded. 

The process is nevertheless irreversible. Disruption happens, so companies must embrace and deal with it to remain viable and competitive. 

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