Your Strategy must respond to Disruptive Technologies!

Disruptive technologies are continuously evolving in every segment of the economy from automobiles to energy and most surprisingly, even the plantation of trees. Electric Vehicles, Internet of Things (IoT) and Reforestation by Drones are just a few examples where innovation is forcing organizations and their management to develop strategies that not only focus on improving their core operations and sustain the market share but also look to the entrepreneurial developments that have the potential to become the new future.  

Innovation is a key driver of growth in every sector, from products to services, to ensure a sustainable revenue stream and maintain a competitive advantage in the market. Companies that have been successful over the years have responded in an effective and efficient way to the changing market needs by monitoring their customer’s preferences, advancement in technology, and optimizing their supply chains to offer quality products and services to their customers. However, assuming this response to market as “Innovation” has led to the downfall of many successful businesses and organizations and is called by author Christensen as “The Innovator’s Dilemma”.

The automobile sector, for instance, has continuously responded to market changes by adapting to improved fuel standards, better engine design, use of aluminum etc. These changes are either a result of regulations or technology advancements that every industry player must make to sustain its market. However, in words of Christensen, technologies are called disruptive when there does not exist a market, a historical trend, customer preference or indicator that could possibly help the strategists in coining the way to gain advantage position or improve the chance of success. And, not taking risks to enter such markets or delaying the entry could eventually result in the failure of the entire business as these disruptive technologies have the potential to become mainstream customer preferences. Also, investing heavily in an uncertain market or product could also prove to be disastrous. Therefore, the modern day strategists need to adopt, what is called by the author as “Agnostic Marketing” techniques.

For example, the advent of electric vehicles, although still evolving, is making the automobile manufacturers think about new design, new ideas and even change their strategies on investment as the future automobile market is expected to be dominated by this vehicle type. Similarly, the appliance manufacturers are closely observing the growing popularity and adoption of smart appliances and the future role of the Internet of things in efficiently managing the growing demand from the energy sector. By adopting a discovery-driven planning approach, strategists need to understand the market needs, customer expectations, as well as future development in battery technologies (along with their costs) and accordingly, make decisions with regards to volume and level of investments that need to be planned. Such an approach ensures a dynamic response to changes and thus, allows the management to compete and sustain when the disruptive technology becomes established into the main market segment. Further, planning for recycling facilities or disposal of batteries that have the potential to cause environmental degradation could provide a first mover advantage to the automobile manufacturers in effectively tackling the environmental regulations that could pose a threat to the future operations.

The market for any product or service is evolving rapidly and innovation is becoming a mainstream aspect of the management of every industry or organization. It is imperative for the strategists to continuously ideate and innovate in order to stay ahead of the future market developments. Even though risks are attached to such decisions, careful evaluation and continuous market engagement could help to mitigate these risks. Not taking these risks timely could possibly result in a complete failure of the business.