Innovation is bringing rapid change and traditional companies must adapt quickly, says Carly Chynoweth
Twenty years ago, sending someone a photo meant digging out the camera, processing the film, having the prints developed and popping a copy in the post. Ten years ago it was a matter of downloading your pics to computer and attaching it to an email. Today, however, we can take and share photos by phone in a matter of moments with no need for a traditional camera, let alone film, prints or the assistance of the Royal Mail; technology has thoroughly disrupted the photography market.
But it is far from alone. Any market, particularly if it is dominated by established players with a traditional approach, can find itself turned upside down by the arrival of new technology, according to George Tovstiga, professor of strategy and innovation management at Henley Business School.
â€œDisruptive technology changes the way people think . . . it breaks the framework,â€ he said. â€œBut disruption is not about the technology alone â€” it is about technology in combination with social and economic drivers.â€ A company that designs driverless electric hovercars, for example, will not disrupt the traditional car market unless consumers decide that they are safe, affordable and a better idea than a privately owned four-wheel drive.
If such a product does arise, there is a very good chance that it will be developed by a start-up, or at least by a company that has retained its entrepreneurial ethos, the professor said.
â€œLarge organisations kill radical ideas [because] they donâ€™t like risk. They want to be able to deliver to investors who expect a predictable rate of return, which means you donâ€™t go down risky routes.â€
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This wariness comes down to one simple, if frustrating, fact: there are so many factors involved that there is no way to reliably predict which technologies will turn out to be disruptive winners, not least because they frequently come from unexpected quarters. It is for that reason that Nicole Yershon, director of innovative solutions at Ogilvy & Mather, the marketing and advertising group, advises companies to look well beyond the boundaries of their own sector.
â€œNo longer can you assume that your biggest competitor will come from the same industry as you,â€ she said. Collaborating with other businesses, including start-ups, can help established companies keep in touch with the latest developments.
Another option is to try for an â€œambidextrousâ€ approach, in which big organisations keep investors happy by nurturing their main business while at the same time investing in or buying new ventures, Professor Tovstiga said.
One sector that appears to be ripe for disruption is financial services. The rise of peer-to-peer lending, crowdfunding and companies such as Market Invoice â€” allowing businesses to sell outstanding invoices to access funds faster â€” suggests that it is underway already.
Consumers can also expect to see changes soon, according to James Haycock, the founder of Adaptive Lab, a digital disruption specialist and the co-author of Bye Bye Banks?, which takes a close look at the forces driving change in financial services.
â€œIâ€™ll give you a personal example, Haycock said. â€œI was in the US trying to extend my credit card limit, so I called my bank. They said they would do it but it would take 30 minutes. However, there are new companies that can credit score people and give them a line of credit in a fraction of a second.â€
Consumers who are now used to faster, more convenient service from other companies are demanding it of banks, too. â€œBanks are doing a reasonable job of getting quicker â€” they have a lot of smart people â€” but what they usually do is evolve what they have always done rather than changing the foundation,â€ Haycock said.
â€œBanks are still doing things the old way, with the old attitude behind it. Technology is a massive enabler of change but it is also about the attitude behind it.â€
Advertising feature: â€˜Agileâ€™ copycats bring bounce to business
The success of the technology sector has inspired countless copycats and is changing the shape of traditional business practices, according to Hiscox in its new editorial series:
â€¢ â€œThe lines between traditional customer and supplier have blurred and a lot of it has been influenced by the concept of agile methodologies â€” building something in collaboration with who the ultimate user will be. Itâ€™s a fantastic result of startup culture and itâ€™s being adopted by bigger companies.â€ Alicia Navarro, Skimlinks
â€¢ â€œYouâ€™re seeing the dawn of how technology is changing our world. Thereâ€™ll come a day when robots and automatons can physically do very basic menial tasks and the people who were employed in them will have to move somewhere else. For the next generation itâ€™s code â€” young people learning to code and write software. That, in many ways, will be the bricks and mortar of our future economy.â€ Piers Linney, Outsourcery
â€¢ â€œTechnology has dramatically reshaped the world we live in, and financial technology is now a major force of disruption in the traditional financial services landscape.â€ Giles Andrews, Zopa
â€¢ â€œThe rate at which regional tech clusters are developing is staggering: take Bournemouth, where the number of new digital companies formed between 2010 and 2013 rose by 212 per cent.â€ Richard Dennys, Tech City UK
â€¢ â€œBusinesses need to be agile to thrive in a world dominated by 24-hour news and live reactions streaming over social media, and itâ€™s much easier to foster this agility when you have the right technology in place. It gives businesses the freedom to take the risks that they wouldnâ€™t usually consider, those that technology start-ups take every day.â€ Tamara Littleton, Emoderation