Wednesday, October 30, 2013

Incorporating Disruption into Strategy

Wednesday, October 30th, 2013



Incorporating Disruption into Strategy

by Teja Setty (vts@andrew.cmu.edu)


Strategy is the creation of a unique value proposition for the customer which is in tune with the organizations vision. Often successful strategies are based on the organizations ability to have a vision for the future, and requires them to be able to make the hard decision.

Disruptive changes are a frequent occurrence with the evolution of technology, but whether the incumbent wins or the entrant wins is a case of who is better prepared, and who better evaluates the potential of the disruptive technology. Netflix has been a great example of being both an entrant, and also an incumbent.

Blockbuster the brick and mortar DVD rental company was a heavy weight incumbent with a presence all over the country with a business model that had lasted a long time however when technological changes allowed for evolution, they did not make the right decisions and evolve to deliver the best value to its customers. Netflix replaced the antiquated business model with a mail in online rental option which offered great convenience to its customers. This disruption led to the steady decline of brick and mortar movie rental companies, and made Netflix a very successful organization.

Netflix could have fallen prey to its own success the same way Blockbuster did, however their constant desire to evolve, and be at the forefront of disruptive technologies enabled them to envision their streaming service, which was the next big disruption. As an organization, Netflix's willingness to embrace the next big change, and also their willingness to downsize their previous business model ensured that they survived even though they were the incumbents.

In conclusion disruptive changes are the norm at present, but whether the incumbent wins or the entrant wins all comes down to the organizations strategy and their approach to change. The organization should not embrace every change in the market, but should constantly be willing to embrace changes with a potential to significantly alter their current present value proposition.  



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