Wednesday, November 27, 2013

Big Bang Disruption

Certain technologies wipe out incumbent businesses overnight and do not give any sort of warning. Such a phenomenon is known as big bang disruption. The article titled “Big Bang Disruption” is an eye opener. We as consumers did not even realize how abruptly we stopped using the flash drive when the cloud technology was launched.
The major GPS players lost 85% of their share after the launch of Google maps and this happened in just 18 months.
It is very tough for companies to cope with such big bang disruptions since the disrupters do not even look at them as competition. “Big-bang disrupters may not even see the incumbents as competition. Disrupters don’t share the incumbents’ approach to solving customer needs, and they’re not interested in offering a slightly better price or performance with hopes of gaining a short-term advantage. Usually, they’re just tossing something shiny at consumers, hoping to attract them to a completely different business”. [1]           
Strategy Impact:  These disrupters are very unorthodox in their strategic ideologies. None of them have a concrete strategic plan. In fact they do not follow any strategy and thanks to easy and cheap technology they keep launching one innovation after the other, hoping one of them will be the product that will redefine the industry.

                                                      Fig-1: Traditional v/s big bang customer adoption [1]
As can be seen from the above diagram, the big bang disruptors do not follow any of the traditional customer adoption strategies. This can be seen as a representation of their unorthodox strategies.
What can Incumbents do? : Diversify their portfolio and innovate in different areas. The reason Amazon and Google haven’t been disrupted is because they are constantly innovating and have a wide range of products. Even if one of their products does get hit by Big Bang disruption they will not go out of business.

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