Quite simply, because innovation is everywhere, it’s either affecting you now or it’s about to. The drastic effects of disruptive innovation on big business can be seen over history and in the present day.
Just over 100 years ago, 50% of the world’s most successful companies went bust following the introduction of electricity. They collapsed not because they neglected to use electricity to power their factories, but because they failed to recognise that its true power was much more than just a cheaper, cleaner, and safer alternative to coal. It took far more than 20 years from its introduction for a new breed of entrepreneur to recognise that electricity provided the opportunity to reimagine their factories and the processes used to manufacture products. The big established companies had the resources to radically invest in the new technology, but they found it almost impossible to let go of the old ways of working, partly because psychologically the old methods had proven to be very successful for them, and economically they had invested significantly in the traditional design of their factories around a central steam-driven drive shaft, and they wanted electrically driven shafts that simply mirrored that same layout. Also, they didn’t want to have to reinvest in new equipment, training, or working methods.
Exactly the same thing has been happening over the last 20 years with the introduction of digital technologies. Again, 50% of the most successful top Fortune 500 companies have gone bust as a result of digital transformation, and, because we’re still in the early stages of these radical changes, this presents an enormous opportunity for fast-moving and open-minded small-business owners to take full advantage.
Many big businesses find it very difficult to make anything other than cosmetic digital changes to the way they go to market because they have so much legacy investment in old technologies and ways of working and thinking. We already have so many examples of new thinking tech companies that have reimagined how to go to market that there is no longer any excuse not to at least explore whether your business could achieve something similar.
The most startling aspects of the business transformations haven’t been the uniqueness of the technology but instead the freshness of the thinking applied. Amazon had no special technology or experience in its chosen sector, neither did Facebook, Uber, Airbnb, Salesforce.com, Slack, Deliveroo, Peloton, Qualtrics, or thousands of others. Think of virtually any market sector and you will see examples of big established companies that had the resources, skill, and opportunity to create their disruptive competitor’s business model, but, for a variety of reasons, failed to execute. Why didn’t one of the enormous media conglomerates forecast the threat of Facebook, YouTube, Instagram, etc. – because they were unable to innovate against their existing business models and legacy infrastructure.
This is the opportunity that awaits every small-business owner with the courage to explore how they can innovate.
As discussed within the opening chapter on transformational strategy, probably the biggest opportunity is for small-business owners to reimagine and restructure their offerings, so that they make their competitors irrelevant by producing a radical increase in customer value. This chapter explores additional tools and concepts to help in the pursuit of this overall goal.
There are just as many risks for small businesses that stick their heads in the sand and ignore the scale of changes that are sweeping across so many markets. Small business is up against just as many new competitors as the big guys. The big suppliers in each marketplace are now alert to the threats posed from the exponential organisations attacking them, so they are doing everything they can to learn from them, acquire them, or defeat them. Of course, this means more challenging competition for the small-business owner. Also, there are new businesses being scaled up quickly from all corners of the globe as even underdeveloped countries access markets with products and services built on new technologies and fresh new thinking.
No small-business owner needs to be reminded just how quickly things are changing; they know that standing still for five or so years is simply not an option.