Disruptive innovation threatens many industries right now. One of the things that makes it hard for established firms to deal with disruption is the speed with which it happens.
In her annual review of internet trends, Mary Meeker includes a slide that demonstrates this speed:
The whole report is filled with insights, but this is the slide that leapt out at me.
There’s a lot going on, including:
- Complete transformation of the market. The three systems that dominate 2013 had just 5% of the market in 2005. Even more striking, two of them (iOS and Android) didn’t even exist in 2005. If you were Nokia in 2005, you were probably rightly worried about the sudden rise of Blackberry, but Apple and Google probably weren’t even on the radar.
- The dominant systems from 2005 are now functionally extinct. Symbian and Linux are gone, and Blackberry is just holding on.
- Change happens quickly. Blackberry’s market share was about the same in both 2005 and 2013, but was pretty substantial in 2010. That’s a pretty fast rise and fall.
- There’s still opportunity on the fringes of the market. One thing that this slide hides is how much the market has grown. This means that a 5% share in 2013 is worth a lot more than the same share was in 2005, because the market is much larger.
What Does This Mean for Me?
All this is fine, but what does this mean for people and firms in other industries?
There are several important implications:
- Change happens incredibly quickly. The economist Rudi Dornbusch succinctly describes the way that ideas spread: Things take longer to happen than you think they will and then they happen faster than you thought they could.
- It’s the innovation S-Curve at work – ideas diffuse very slowly at first, then BAM! They hit a lot harder, and a lot faster than you expect.
- Rapid innovation breaks down industry barriers. When innovation cranks up, the boundaries between industries become a lot more porous. In 2005, Nokia and Blackberry were looking at each other, with a wary eye on Microsoft as well. But Apple made PCs and MP3 players, and Google was a website – no need to pay attention to them. Many of the early reviews of iPhones and Android phones ridiculed the firms for venturing out of their areas of competence. But in turbulent times, the threat often comes from a space that we’re not watching.
- It’s not just phones. It’s not just phones – a lot of industries will be unrecognisable in ten years. There are significant disruptions coming in construction, automobiles, healthcare, higher education, and the list goes on. It’s something you probably need to be thinking about.
So, What Do We Do?
We’re all in the knowledge business now – and we need to start thinking about what that means.
Mike Arauz from UnderCurrent gives some great guidance on dealing with this change in his must-read post On the Nature of Digital Transformation: 10 Observations. One of his observations is “our inability to predict the future doesn’t make it any less inevitable.” He goes on to say;
Here are a few useful questions to ask about technologically driven change:
- “What is most likely to happen?”
- “When will it happen?”
- “How will it happen?”
- “Who is most likely to be affected when it happens?”
On the other hand, 99% of the time, this turns out to be a dangerously useless question to ask:
- “Will it happen at all?”
History shows that all of these questions are difficult to answer accurately. The fact that they’re all hard to answer, however, doesn’t make them all equal. The difference between the first group and the last question is that the first group of questions pushes you to imagine what could be. It pushes the people asking the questions toward exploration and action. It inspires critical thinking and creative problem solving.
On the other hand, questioning possibility itself provides perilous cover for inaction.
This is where the sudden nature of change becomes important. When we’re on the flat part of the S-Curve, it is easy to tell yourself that change is still far in the future. That’s when you ask “Will it happen at all?”
As Mike says, that’s the wrong question.
It’s time to start building firms and systems that are more resilient, flexible and innovative. That’s the best way to cope with rapid change.
image credit: businessman running image from bigstock
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Tim Kastelle is a Lecturer in Innovation Management in the University of Queensland Business School. He blogs about innovation at the Innovation Leadership Network.