If you haven’t read part 1 – Self-Disrupt or Self-Destruct
Of course, not all disruption replaces entire markets, or stems from technical innovation; a different process or simplified method may be disruptive as well. Case in point: the recent announcement that Amazon, Berkshire Hathaway, and JP Morgan Chase are forming a non-profit healthcare company for their employees in the U.S. The news added more uncertainty to the health insurance industry already challenged by complexity, extensive regulation and harsh economic realities.
The announcement sent the stocks of established healthcare providers plummeting, triggering a wave of speculation about the overall impact of the new venture. Perhaps, we’ll have a better understanding of our own healthcare costs or easier access to medical records; or perhaps, it will usher in a new era of new and agile thinking about healthcare that was, until now, simply “just great ideas.”
When we speak of disruptive innovation, another example that is often mentioned is Uber, which was able to transform the taxicab industry. Taxi cabs today are in dire competition with Uber, Lyft, and other smartphone app-enabled rideshare services. For the consumer, anyone with a smartphone can use the Uber app to call for a ride – faster and easier than the old way of “calling a cab,” whereas contracted drivers have the “gig economy” flexibility to set their own hours and work only when they want and in the geographic areas they desire. Uber fees are cheaper than traditional taxi fares and pick up/wait times are generally far less than the typical taxi cab.
This goes to show that one clever innovation or a simplified business model can ultimately transform an age-old industry very quickly.
Organizations may differ in their disruptive approach, but they do share some common traits that enable them to out-innovate their competitors.
So, when is the best time to exercise your innovation? The short answer is: now. Many times, disruptive ideas come about as the “mother of necessity” in a down economy to address the need for a better, cheaper, and more efficient means of providing goods and services. And sometimes they come as a result of a merger, acquisition, or joint partnership, such as in the case of the new Amazon healthcare venture. But they can also arise in a strong economy. Recent wide sweeping tax reform is giving U.S. businesses access to a lot more capital, and many companies are quickly putting these new resources to work. For example, Exxon just announced it will be embarking on a $50 billion investment plan in its U.S. operations. Only time will tell if this stimulus will unleash a tsunami of innovation, but savvy businesses will work to get on the right side of disruption so they can ride this wave.
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