Embrace the disruption
In today’s world, it’s rare for things to be completely clear or precisely determinable. Not everything is black and white. The demands on modern organizations and management are more contradictory and paradoxical than ever before, challenging orthodox value systems and business principles.
In a world where the “what” takes a back seat to the “why”, making bold decisions requires courage, awareness, and a willingness to make mistakes. In digital transformation, this ambiguity is often forgotten.
In this article we’ll discuss why disruption is inevitable and how to embrace it.
As disruption can approach from any given direction, it is no longer a question of whether it will happen but when. Emerging and adopting new technologies, innovation, and management practices make old ways of creating competitive advantage ineffective.
Thus, when thinking about digital disruption, it is essential to view it as an underlying timeline inherent in each industry, where the industry in question is either disrupted, in the midst of being disrupted, or to-be-disrupted.
Accenture, a Fortune 500 Professional Services company, recently analyzed 10,000 companies in a disruption report and published staggeringly high numbers regarding companies currently facing high levels of disruption (63%) and those that show severe signs of susceptibility to future disruption (44%).
In this highly transformative age, the only certainty is change. It's becoming more challenging to anticipate events, and our modern world is more complex than ever. At the same time, binary decisions are a thing of the past, and we now need to deal with contradictory demands that challenge conventional value systems and traditional business principles.
It is important to note that disruption should not be wholly shunned. Though it is to be rightfully feared for its prowess and dangers, it also presents an opportunity. You only need to look at companies such as Apple, Google, and Amazon to realize how lucrative it can be for businesses to use disruption to their advantage.
When disruption happens, new entrants wielding new approaches uproot incumbents in several ways.
The disruption of sales methods is one such major way, and this becomes evident in what is now the SaaS industry. Previously, software companies only approached C-suite individuals in the sales process. The authority over major decisions was necessary for the buying persona then due to the big budgets involved and the need to install physical infrastructure to support the program being sold.
Then came the cloud era, where software was now being sold as a service. Software companies no longer needed physical infrastructure to support their software applications, and the buying persona thus changed. They would still sell to leaders, but much lower in the organization: individual teams and departments who had gotten some degree of approval to use their tools.
The sales method and process itself has changed and continues to do so. We had moved from first, the physical infrastructure era; to second, the cloud era, and—today—to the third: the end-user era, as aptly coined by OpenView Venture Partners.
The buying persona today is the actual user, and the rules of the game have shifted. Products that are built in ways that allow them to scale their user-base before their customer-base can better capitalize on this disruption of sales methods. Instead of investing heavily into marketing and SDRs (non-quota-bearing sales development reps), today's best products do their own lead generation.
Designing your product in this way will also provide you with Disruption of Sales Methods the healthy fundamentals to building your pricing models on; with complete visibility to what your users value in the product, it's easy to decide on an optimal pricing strategy. And as pricing can have 4x the leverage in areas such as acquisition-to-bottom-line, it's easy to see why product-led SaaS businesses beat their competition in profitability and growth.
The big difference here is this: in the cloud era, all the content and features of the product itself were well hidden behind a paywall. In this new era, customers get access to these content and features before paying. This has become how many SaaS companies sell in this end-user era. Companies have to adapt to this if they are hoping to keep up with the times.
The disruption that is rampant digitalization has also eroded many traditional sources of competitive advantage. Software is replacing hardware via digital offerings and addressing previously unrecognized and untapped gaps in the market.
Take the mobile phone industry, for example. Nokia used to be one of the biggest cell phone makers in the world. A big part of their success was due to new technologies produced by their R&D teams, along with patents that protected their products.
But that's the old world we're talking about. In the new world, software truly owns the world, eating up these old technical competitive advantages that companies have grown so used to. In the mobile phone industry, Apple came along with phones that were much more heavily invested in software than Nokia phones were.
The software era also brought about development cycles that were so much faster, making IP protection significantly less important when compared to incorporating customer feedback and agile development.
The hardware era — with its long product developmental cycles and focus on developing physical products — is now over. The importance of software has grown exponentially, and pretty much all technologies now have to anchor themselves on a software component rather than its physical hardware.
This is the disruption of technical competitive advantages, where—in most industries—whatever you could gain by having superior technology in the old world no longer holds as strongly anymore.