“Disrupt yourself, before someone else does. Disrupt yourself – to dominate the next wave of business, even if in the near-term it undercut your existing one.” – Clayton Christiansen
‘Protect the base’ thinking makes total sense in the short term but makes you vulnerable in the long run to new competition as it stifles innovation, transformation and change over the longer term. The dominant firms of yesterday have at best a precarious hold on the success of tomorrow.
Dell built a hugely successful multi-billion dollar business on it’s ability to execute. Dell exemplified execution. Execution in sourcing components, execution in supply chain management, execution in low cost/high quality Just-In-Time assembly and execution in driving the channel to take huge shipments at the end of every quarter. So while the market demanded ever increasing numbers of PC, Dell dominated. Dell’s business model of constantly driving additional economies of scale through operational excellence kept Dell at the top for over 25 years. But when the market shifted (as all markets do) to Smart phones and Tablets, execution didn’t cut it any more. The market now wanted new and different, radically different. The market wanted innovation from PC vendors. Innovation was the new business model, the business model that would take Technology and PC vendors directly to the sweet spot of the business opportunity created by market shift. Innovation, not execution was the market maker.
We all have 20/20 vision in hindsight. Looking back from where we are today this may seem obvious, but at the time who could see it coming and how? Certainly not those who had a vested interest in the continuation of the current business model, such as Dell management. After all they had over 100 quarters of proof that their business model worked and worked extraordinarily well. Those who could see it coming had to first imagine it, then create it, then get the market to want it. And that is all about innovation. Innovation at multiple levels; product innovation, marketing innovation, sales innovation and ultimately innovation of the underlying business model.
Execution is a powerful competitive advantage when markets are in high growth through to maturity. Innovation is critical to bring new technologies, products and services to market when shifts occur and the status quo loses it appeal to buyers.
“The ultimate success is to define future markets, and place yourself at the center of them.” – Aaron Levie, Founder & CEO, Box.net
Question: When was the last time you disrupted your business? Think: Market -> Market shift. Think: Product -> Product experience. Think: Customer needs -> benefits the customer might want tomorrow.
Takeaway: Over the longer term Execution is tactical and temporary, Innovation is strategic and sustainable. The choice is yours: Disrupt or be Disrupted.