Innovation key to staying atop disruption
When you hear the words ‘‘digital disruption’’, your first thought is probably the companies, websites and apps that have up-ended entire industries.
But is this the only form disruption can take?
The simple answer is no. One of the best examples of digital disruption saw its core business slowly hollowed out on all sides by many competitors.
Weight Watchers, an international weight management juggernaut,
went from a single meeting in 1963 to an annual revenue of US$1.8 billion (NZ$2.5b) a year by 2011, with shares trading at over US$80.
Since 2011, the company’s share price has precipitously dropped, going as low as US$6 and wiping out over 95 per cent of shareholder value.
In the past few years Weight Watchers has been outgunned across its proposition.
Specialist calorie monitoring apps, food sharing tools, nutritional information apps, diet programme apps, fitness apps and alternate virtual support networks have all grown in popularity, along with digital monitoring gizmos like Fitbits, smartphones and smart watches.
These new players have eroded Weight Watchers’ proposition so it is now literally a shadow of its former self.
The company had global brand recognition, high customer engagement and a strong revenue base.
It wasn’t long ago that Weight Watchers had the resources to pivot its proposition, readdress its customer base and target younger consumers through digital channels.
Instead they doubled down on what worked in the past, ploughing more resources into marketing.
Not only was this ineffective, it accelerated the steep fall in value.
Disruption is now happening constantly and on a large scale, but not necessarily as visibly or as spectacularly as Netflix or Airbn.
Instead, the combined force of many competitors is having the same disruptive effect.
Every company has competitors and sorting the truly disruptive ones from the small fish is no mean feat.
The only way to achieve that is with a proactive, sustainable strategy.
This process has to start with data: on customers, competitors and the state of the market.
Gathering data has to be part of business as usual, it has to be constant and an integrated part of the review process.
Once you’ve put your business on the scales, it’s time to put that data to use: what does it mean? What are the trends? How is it different to 12 months ago?
Data needs a purpose and every company needs processes in place to turn data into organisational change.
When you truly understand the shape of the market, you can start to develop new business ideas that fill the holes you have spotted.
Refining this into a usable product is where a lot of innovation strategies come undone, especially if they fail to break past business as usual.
Just like a diet, you have to stick with an innovation strategy until it becomes second-nature.
You have to constantly think of new products and adjust your efforts as the market changes.
It’s hard to predict where the most potent threats will come from, let alone formulate an appropriate response.
It isn’t just disruptive start-ups that companies should focus on, but also the very real risk that its business will be eroded from all sides.
However, transforming into a lean, mean innovation machine demands nothing less than a comprehensive strategy that faces this potential head-on.
Disruption is now happening constantly and on a large scale, but not necessarily as visibly or as spectacularly as Netflix or Airbnb.