Imperial College insight on managing disruption

Imperial College insight on managing disruption

In the era of the Internet of Things, businesses are facing disruption left, right and centre as technology cycles continue to outpace planning cycles.

As entrepreneurs have less time to prepare for volatile market changes we speak to Ileana Stigliani, assistant professor of design and innovation and leader in Design Thinking MBA at Imperial College Business School, about how business owners can protect their enterprise by managing disruption.

In recent decades, technology has rapidly evolved to meet the growing demands from consumers. Developments such as the mobile internet, artificial intelligence, 3D printing and blockchain have had a dramatic impact on the way businesses operate. In such a competitive environment, innovation is the key to survival and staying ahead of the curve. 

Stigliani cites companies like Uber, Google and Airbnb as key players that have used innovation to shake up and even turn industries upside down. This disruption, she says, is manifesting in the broadcast industry, where traditional analogue radio is being overtaken by internet radio.

She explains: “For example, Pandora is a music and web disruptor that aims to provide users with a personalised radio experience, by offering free listening, with only 80 seconds of advertising an hour.

“Disruption is also becoming more widespread in the gaming industry. For example, Zynga is an integrated social media gaming platform that doesn’t require a console and therefore challenges the use and need for game consoling. As a consequence, the price of game consoles is going down and companies are finding ways to tap into this market.”

The impact of technology on business planning

Advanced technologies have changed the face and the pace of how companies do business. Technology has created new ways of communication, therefore allowing businesses to communicate and collaborate beyond borders.

“Mobile devices such as smartphones and tablets, combined with the power of the internet, have revolutionised the way companies work. Storing information on a cloud computing system rather than on a PC has made information easily accessible anytime and anywhere.

“Thanks to the Internet, virtual organisations are now a reality, and businesses can create geographically dislocated teams to work like a single, unified organisation. Video and conference calling, cloud computing, and instant messaging tools have simplified business processes.”

And with social media platforms like LinkedIn, Twitter and Instagram businesses can connect with their customers in new ways, resulting in better customer service, but also greater productivity and lower costs.

Given the pace at which technology is changing, the ability to adopt new technologies is becoming a vital mechanism to survive and succeed in the marketplace, Stigliani says. However, technology is only one way in which disruption impacts on businesses.

“Disrupters often create business models that are very different from those of incumbents. This can mean offering new, unique products and services, approaching the market in new ways, changing or creating new markets or, ideally, a combination of the three.

“Companies such as Apple, Uber, Netflix and Nintendo have successfully used disruption to change the rules of a whole industry by getting the business model right first and using new technologies to achieve their business goals.”

Data for better or worse

In the age of big data and industry 4.0 companies should incorporate analytics into their strategic visions, develop the right business processes and build capabilities, in order to capture the value of analytics and to make faster, and better-informed decisions, Stigliani advises.

“Big data is a great source of information that can be used to reveal patterns or trends in people’s behaviour and interactions. It allows businesses to target customers more accurately, providing more tailored products or services. 

“Big data tells us that something is happening – for instance by revealing someone’s spending habits. However, it fails to tell us why people make certain choices in the first place. In other words, big data is often decontextualised from culture, values, aspirations and motivations, which represent the root causes of human behaviours. Failing to understand why certain behaviours happen can lead to wrong assumptions and ill-informed decisions.

“In order to successfully innovate, businesses need to combine analytics with qualitative data to provide deeper insight into what influences consumers’ behaviour. This information can be collected ad-hoc through interviews and observations. Traditional methods, such as recorded phone calls, customer reviews, and customer complaints, for example, are a rich source of information for creating a more meaningful and consistent experience for customers.

Managing disruption for clients

Stigliani advises entrepreneurs and small businesses to plan for disruption by identifying pervasive customer problems, and by providing simple yet meaningful solutions to these problems through new products and services.

“The review site Yelp, for example, was launched in 2004 by two software engineers after a conversation about why it was so hard to find a good doctor. Entrepreneurs can also take advantage of overlooked segments of the market and gain a foothold by delivering products and services that meet the specific needs of these segments, and at the same become appealing to mainstream customers.

“An example of this is the London-based start-up YPlan which launched an app that meets the needs of users who want to spontaneously discover, organise and book tickets for a night out. By targeting users 48 hours before an event, the company caters to its target customers while stealing market share from ticket merchants who traditionally aim to sell out months in advance.”

Flip the script

“Small businesses are in a strong position to innovate and become disrupters, as long as they create the conditions for innovation and disruption to unfold. This means they need to create a company culture that supports experimentation and tolerates failure as well as processes that identify unmet needs of specific and overlooked market segments. To be successful, they must develop meaningful solutions that are technologically feasible and financially viable.”

 

About Ileana Stigliani

Stigliani is an assistant professor of design and innovation and leader in Design Thinking on the Full-Time MBA at Imperial College Business School, London. Her research focuses on understanding innovation processes and how people collaborate and interact in teams when they develop new products and services. She received her PhD in management from Bocconi University, Milan, Italy.

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