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Friday, October 7, 2016

Is Your Business Ready For Disruptive Platform Innovation?

I recently read a message on whatapps which said...

  • Whatsapp messaging killed Mobile messaging(SMS)
  • Youtube killed DVDs
  • Skype killed international calling
  • Amazon killed real shopping in malls
  • Facebook killed meeting friends in real

The points mentioned above are not entirely correct. They are partially correct though. It signifies the fact that what is relevant today may not be relevant tomorrow, today's in demand thing may become outdated after few years. 

Businesses change with each passing day. This has been the trend since so many years now. Let us look at one of key example which stands out.

How the music industry changed?

Record Discs gave way to cassette players/ VCRs

Cassette players/ VCRs gave way to CD ROMs/ Blue ray disks

CD ROMs/ Blue ray disks gave way to USB storage devices

USB storage devices gave way to Cloud storage/ Google Drive/ Youtube etc

What is the resulting impact of these changes?

  • Now you can't run a video library business which gives Video cassettes on rent, instead the customer has options to rent movies online, for example on Netflix.
  • Laptops do not have a CD drive these days, that means the CD ROM manufacturers and CD Drive manufacturers are out of business.
  • Storage space has become cheaper by the day so you can have a 64 GB memory on your smartphone and upload or download video/ content directly from your phone onto a common cloud location for sharing or retrieval in future. That means, USB drive and USB storage devices are getting out of business too.
Another example, Internet TV is a reality now and all the TV channels are now available as apps so very soon the cable tv service providers like AT&T, Comcast, Tatasky, Videocon, Reliance etc. will not provide a cable connection to your home or install a dish on your home. All TV channels will be telecast directly using an internet connection and will be played using a app on your TV set. Television set as a hardware may be able to survive just because it provides a larger screen as compared to what a mobile or tablet does.

What happened in the last few years?

With technology innovations the next big change is seen with the replacement of hardware by software, where possible. Initially I was not able to understand how a software can replace a hardware and then one day I realized that the apps/ software on my smartphone have infact replaced many hardware. Let us look at some of the hardware which have changed their forms:

No#1 Transistor or a Radio used to be a hardware earlier, now it is a software sitting on your smartphone

No#2 Camera (photo or video) used to be a hardware, now it is a software on your mobile.

No#3 Wrist watch too has been converted into a software, ditto for stop watch, alarm clock etc.

No#4 Books/ Newspaper/ Magazines have taken a digital form and with gadgets like Amazon Kindle reading has become a different experience all together.

What is happening now?

Traditional businesses are getting transformed. The world today is moving towards platform based online businesses. Consider this (a) Uber is an example of a taxi service which does not own a single car/ taxi but it still is one of largest taxi service in the world and (b) AirBnB who does not own a single hotel is one of the largest online marketplace that enables people to list, find, then rent vacation homes. These are examples of disruptive innovations.

So what should I do now?

  • Re-look at the business you own.
  • If your business is not on internet, figure out how you will take your business online.
  • If your business is already online then it would be wise to do a quick SWOT analysis(Strength, Weakness, Opportunities and Threats) and figure out how you will sustain or save yourself from disruption. Also look at the opporutnities to disrupt and expand your business.

At last remember, this is the era of digitization and IOT(Internet of Things). If you dont disrupt yourself, someone else will.