Breaking an old business model is always going to require leaders to follow their instincts. There will always be persuasive reasons not to take a risk. But if you only do what worked in the past, you’ll wake up one day and find that you’ve been passed by.
Clayton Christensen – Disruption Theorist and Writer
Clayton Christensen was the evangelist of business and personal disruption. The pattern of business disruption he described is familiar. Competitors with new platforms and new work models enter a market because they see opportunities to make money, satisfy customers effectively, or make a difference if they’re a non-profit. The agile startup develops lower cost products or lower quality services but at an acceptable price to the customer. Or, the startup offers an innovative app, product, or service. These apps, products, or services capture the customer’s attention and gain market share. Innovative products and services are eventually tweaked and improved so the startup can go up-market.
Christensen made sense of disruption!
Story: What happens to existing companies? Existing companies choose to ignore or dismiss these startups. Big companies will say: ‘we’re big and smart’; ‘the entrant is stupid and can’t scale’; or even ‘this too shall pass’. Or, there may be other excuses and rationalizations. Existing firms continue to pursue their higher margin, high-quality, branded, and high-volume business. Over time, the startup disruptor achieves an acceptable quality level in a niche segment and then in a broader part of the market. This way, the startup gains traction and competes with existing companies.
If you’re an employee of one of these large companies, beware. Acknowledge your old ‘is’ has changed and now you need to deal with the ‘as is’ or what ‘can be’ of your post-COVID work, career, and job realities. Things that were iron-clad promises such as promotions, work @ home, and even pensions may disappear in the blink of an eye. Companies sometimes may think they owe you nothing!
Work Lesson Earned: If you’re a small business owner, professional service firm, or contractor in VUCA time pay special attention to the Christensen disruption model. Here’s the challenge. Startups and small businesses generate most new jobs. The world over, most predictions of the state and profitability of small businesses are bleak. ‘Nerve wracking.’ ‘Never seen this’. ‘Going out of business’. ‘Going to do something else’.
The trillion dollar questions for all small businesses are: will consumers shop and come back Will their behavior change after COVID? What are the costs of COVID safety and compliance?When will profits come back? These fears are real. Big and small business risks and consequences are real. No business => no profits. This seems unreal to lots of folks due to high uncertainty and risks, which are now synonymous with our post COVID – maybe stagflation era.
Bio:
Greg Hutchins PE CERM is the founder of the Certified Enterprise Risk Manager(R) Academy. He has written over 30 books on risk management, quality management, supply management and the future of Work.
He can be reached at:
Greg@800Compete.com
503.233.1012
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