The best defence is a good offence: a two-tier strategy for responding to disruption in your industry

About the Author: Ashley Thomson
Ashley Thomson

defence against disruptionIn our two previous blogs on disruption, we explored the impact of disruption on small business owners  and how to spot disruption early to avoid a collision. In this third instalment, let’s take a closer look at how your small business can respond to the challenges and opportunities of disruption in your industry.

No sitting ducks
The clear message experts are sending to the business world is that there is no strategic advantage in taking a ‘wait and see’ approach. Industry stagnation is sure to attract the attention of disruptors, as it often leads to lower levels of customer satisfaction. The resulting ‘chatter’ on social media, will often give potential disruptors clues about the customer’s pain points and they won’t wait for a perfect plan or the right moment to strike. They know it is an innovation race against time. A proactive response is your only viable option.

A double-strength response strategy
I mentor my Tenfold business coaching clients to work in two ways when responding to disruption in their industry. Like a king in his castle, you need to work out your plans for defence and attack. It isn’t enough to simply pull up the drawbridge and hope the disruptors don’t break down your walls. Business owners have to be calmly and quietly working away at their own innovation strategies.

Here are some examples of ‘defend’ and ‘attack’ strategies that have helped my coaching clients come out on top:

Defend against the threat

  • Mine social media for insights
    Placing your customer at the centre of your business strategy is ‘Business Operating 101’, but it is surprising how many business owners fail to do this. It will ultimately lead to their downfall. Customers prefer (and are loyal to) companies that respond actively to their feedback. Social media is handing you those insights on a silver platter. Pay special attention to any bad reviews and complaints you may receive – they may reveal any chinks in your armour.


  • Prioritise Customer Convenience
    Take a good look at your supply chain and customer service areas and tighten up any loose nuts and bolts. Make sure you are offering your customer the most convenient way of finding, purchasing and receiving your product or service.


  • Reposition as a premium offering
    Disruptors often offer products and services at a lower price point. It can be difficult, even impossible, for existing small business owners to match, let alone beat, the new competition at that end of the market. The answer: don’t try to compete on price. In fact, repositioning your brand as a higher-end offering may be the answer.Consider how mid-priced hotels might have responded to Airbnb. The accommodation-sharing website offers a ‘homey’ place to stay at a lower rate than most hotels can offer. Simply lowering the room rate would only degrade a hotel’s profit margin and brand perception; “I’m aspiring to enter the ‘cheap and nasty’ market” said no business owner ever. Instead of racing to the bottom, a hotel would be better off investing in upgraded décor and services and repositioning as a ‘luxury’ alternative that offers more than just a pillow to rest your head.


  • Find a niche or market that is less likely to be disrupted
    There can be safe-havens within some industries where the effects of disruption may not be felt so keenly. Often corporate markets are slower to disrupt because of the relationship-based nature of corporate offerings. For example, travel agents may have become largely unnecessary to the average customer who can take the time to compare deals and book their own travel online. Corporate clients, on the other hand, are time poor and often prefer to outsource travel booking to someone (human) that they know and trust.


  • Personalise your products or services
    Disruption often takes the form of simplification, so the personalisation of products and services can fall by the wayside. The one thing tech will never truly replicate is the ‘human element’ that interacting with a real person brings to the customer experience. How often do you call up a customer service line and choose to bypass all the automated options, instead preferring to speak to an operator? Services can rarely be completely standardised and some customer needs are too individual and complex for even the most sophisticated computer to resolve. There may be customer personalised service opportunities in the spaces where tech drops the ball.


  • Extend outside of your industry
    Diversification has always presented a viable way to expand your business. It can also provide a way to side-step out of a disrupting industry and spread a few of those proverbial eggs over a couple more baskets.A prime example of this strategy’s success is Fujifilm. Digital cameras led to a shrinking market for analog cameras and film. Instead of making the move to digital, the photography giant found an unlikely new market to enter – Fujifilm discovered that the antioxidant, astaxanthin, which they used in their film to stop UV fading the colour, also prevents human skin from ageing. Their cosmetic division is now one of its most profitable.


  • Call in the legal eagles…or maybe don’t…
    There may be legal action you can take that will slow disruption down but use this strategy judiciously (pardon the pun), as it won’t apply to all industries and it isn’t a long-term strategy. The best-case scenario is that you will buy yourself a little extra time in which you can implement your own innovation plans.Consider the music industry. Artists and record companies tried to block Napster and other music downloading websites in the courts, but all they achieved was being a minor pain in the neck. Customers were determined to find a cheaper, more personalised way to access music online. With the development of iTunes, Apple found a way to meet that customer need and still turn a profit. The traditional ‘album’ release model was dead and record companies had to concede defeat.


Attack the disruptive opportunity

  • Become a disruptor
    Your mission (should you choose to accept it) is to gather information: research new technology, identify fresh connections between seemingly different industries and changes to supply chain practices. Tune into social media, seek out industry news publications. Track and analyse customer behaviour. Focus on your customer experience, anticipate their needs and work on solutions to problems that they don’t know that they have yet. Can you meet those future needs through innovation? Go ahead and push the ‘disrupt’ button!


  • Forget your core business (to think like an entrepreneur)
    This seems like a dramatic response, but I am really referring to a shift of focus. I am assuming that you have taken care of your core business during through your defence efforts, as listed above. When you are attempting to be truly innovative in your industry, you will need to free your mind from the confines of ‘what we do now’.


  • Invest in disruption
    This can take a few forms. It may mean literally investing in start-ups who are developing a product that you predict will disrupt your industry. As a sort of benefactor for that company you would likely become one of the first to implement any changes that arise from the innovation. Conversely, it may mean purchasing a company that is innovating in your industry. This is an expensive option, but if you can fund it, a great way of gaining some control over a disruptive force. In most cases it will simply mean becoming an early adopter of an innovative product or process that will help you simplify your business operation.


  • Don’t run a ‘Red Queen’ race
    Simply imitating innovation will see you running in a race that no one can win (you are all running on the spot!). Think of the way that the major banks are forced to copy each other’s new offers; within days of one reducing fees or offering a new interest rate the rest will (as they must) follow. If there have been innovations that have disrupted your industry, don’t just copy: disrupt the disruptor.This is one strategy that Apple uses to constantly stay ahead of competitors. They never sit back and wait for the rest of the market to ‘catch up’. By the time they had launched the iPhone which knocked the iPod of its throne, they were already working on the next product that would likely cannibalise their current release. They disrupt themselves so no one else gets the chance.


Small business is leading the way
It is not big companies with their huge R&D departments and dedicated Marketing teams who are shaking up the way business is done. Nope, it is the tiny start-ups who are leading the way in innovation. This is proof-positive that it is not unrealistic for a small business owner to achieve big things. For once, your success will not be limited by size or budget, but by your ability to imagine how things may be done differently.