27 April 2017

How Digital Disruption is Business Darwinism in Action

 

The Origin of Business: How Disruption is Darwinism in Action

Charles Darwin’s seminal book “On the Origin of Species” changed how we look at the natural world. He observed and recorded how the organisms that best adapt to their environment survive, while others go extinct. His conclusions became the principles upon which our understanding of evolution has developed ever since.

What happens if we adopt this idea of the “survival of the fittest” to the business world to explain a phenomenon that we’re observing right now: digital disruption?

Survival of the disruptor

Business Darwinism describes an environment in which only the strongest, most adaptable and versatile industry players survive to become market leaders. It is this will to survive that drives innovation, the rethinking of work processes, adjusting of business plans and constant assessment of market demands. If businesses did not care to survive, industry would stagnate. In the end, businesses are competing against each other to win over customers – and this works best by providing the best product or service that meets their customers’ needs in the most valuable way.

The fact that today’s business world is not stuck in the old ways of trading pelts for blueberries is proof that the reality of our markets is one of evolution and reinvention. Businesses are in a constant battle of competition, which forces them to innovate and adopt their strategy to the changing needs of their customers and external factors influencing their industry. While some innovations are easy to copy, others are so profoundly different that competitors have trouble imitating them.

When people adopt technology, they do old things in new ways. When people internalize technology, they find new things to do.

James McQuivey

This leads us to the topic of business disruption.

What is disruption?

Based on the work of David L. Rogers, disruption happens when “an existing industry faces a challenger that offers far greater value to the customer in a way that existing firms cannot compete with directly.”

This definition of disruption contains some key points. First, challengers have to offer “far better value” to the customer. According to Rogers, this means disruptors have to either make a product or service much more affordable or more easily accessible. Second, he stresses with his definition that for disruption to happen, existing firms can’t compete with new competitors directly. This stems from the fact that challengers are asymmetric competitors rather than direct ones – they do business in a way that can’t be copied within the existing business models of the current industry players.

Learn how to spot and defeat digital disruption with our FREE case study and strategy guide!

 

Through the lens of business Darwinism, we could conclude that the world is currently undergoing its latest transitional phase: digital disruption. New technologies have, in this case, allowed asymmetric competitors to come up with a product or service of far greater value which can’t be competed with directly by incumbents. There are plenty of examples showing how digital disrupters shook up a whole industry and outsmarted traditional businesses by offering more valuable products and services to their customers. Classic examples such as Airbnb, Uber and Netflix are only a few of them – the potential of digital technologies to revolutionise how businesses work are endless.

Due to their effect of dooming incumbents within their industry, as their business model can’t be copied, digital disrupters are mostly seen as a threat and scapegoat for the decline of a company affected by disruption. When thinking about it from a Darwinistic point of view, though, disruption offers the possibility for businesses to improve and ultimately benefits us customers as we are affected positively by innovation and advanced products. As a business, you therefore shouldn’t shun disruptors because they are “killing business”. Rather, you should see this as an opportunity to disrupt yourself.

It seems controversial to say that through disrupting yourself you actually give yourself the chance to survive – but this is exactly what our fast thriving industries and economists like Schumpeter are advocating.

Is creative destruction the way to survive?

Digital disruption and business Darwinism shouldn’t be confined to finding weaknesses in your competition and trying to use them to your advantage. You also need to look at your own processes and identify where your own weaknesses lie, if only because your competition is doing the exact same thing on their end. Do not allow for operational shortcomings to lead to loss of market share. Be inwardly disruptive as well as outwardly; dare to look at improvements you can introduce in your own operation. Start by developing an agile business plan that impacts both your infrastructure—from IT to processes—and your human resources.

Amazon is a prime example of a business that’s always been on the cutting edge of digital disruption. They constantly tweak their online platform, even when it is working fine. They supply both physical and digital goods, including streaming services. Amazon have developed an agile business model that turns this constant stream of innovation into a core tenet of their operational strategies, instead of being an added task.

For your business to thrive and remain relevant, an approach rooted in business Darwinism—where digital disruption, agile solutions and forward thinking form the foundation of your operational model—will help you be the fittest company in your industry. Dodo bird be damned.

For more information on digital disruption and what to do when your business is disrupted, download our case study and strategy guide: Disrupt or become disrupted.




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