Digital Transformation
cancel
Showing results for 
Search instead for 
Did you mean: 

The 3 types of Digital Disruption

mikeshaw747

In this blog post I look at a couple of excellent models on disruption that I think can really help us. 

These two models come from Geoffrey Moore. His original posts on these models can be found here, here and here. Disruption and how to organise for it is the subject of his upcoming book (not sure the book has a title yet).

The first model is to do with the types of disruption that we face. The second model is to do with what an incumbent needs to do in response to a disruption attack. 

 

Geoffrey Moore’s "Three Levels of Disruption" Model

12. moore models-1.png

Geoffrey Moore says that there are three types of disruption :

1. The first level is “IT disruption”

Examples: Cloud and SaaS. IT level disruption doesn’t typically affect customers that much. For example, as a buyer of HP Printers, I’m not sure there would be much business upon me because HP has moved from Siebel to SalesForce.com.

2. The next is “business operations disruption”

For example, physical checking to online checking to mobile checkin – we are doing the same thing (checking into an airplane, but in a different, more efficient way).   Netflix has made it much easier to get your movie to watch. And, they have made it easier to choose what to watch next. Mobile banking is starting to make it easier to do your banking while on the move. Google Nest makes it easier to setup the characteristics of your home’s temperature.

3. The most disruptive disruption is at the business level.

This type of disruption changes the way business is done. I think that Spotify and Uber fit here – Spotify hasn’t just provided music streaming, it’s made music consumption a collaborative sport. Same for Uber; they haven’t made taxis more efficient, they have changed the model for travelling in non-self owned vehicles.  YouTube has disrupted the model for distribution and monitization of videos so that 16 year olds can sit in their bedrooms making thousands of dollars from their vlogs. Autonomous cars could dramatically reduce the number of cars on the roads. A study by Uber estimated that autonomous cars could cut the number of cars in London by 66%. IDC estimates that more than 50% of spare parts will be 3D printed by 2020. 

 

Geoffrey Moore’s second model : "Defensive or Offensive Disruption"

12. moore model-2.png

Further, Geoffrey Moore says that the way you disrupt depends upon if you are the incumbent or not. 

If you are an incumbent, you must not try to disrupt your business model. Why? Because as an incumbent you have an eco-system around you. And it’s the combination of your business model and the eco-system that generates your profit. This eco-system idea reminds of Belgian breweries. Belgian brewers believe that the unique flavour of their beers comes, in part, from the fungus growing on the wall of their breweries. They haven’t cleaned the brewery walls for centuries for fear of upsetting the “ecosystem”, and thus, ruining their beer’s flavour. 

So, if you are an incumbent under attack, what should you do? You should work tirelessly to create business operations disruption. You do this though two things. Systems of Engagement and the use of Big Data (more on the latter point in the next blog post). 

Imagine that all the San Fransisco taxis companies had got together and created an app that allowed you to order a taxi, know how close that taxi was to you, and to make payments very easily. Would Uber have still been able to so easily take 70% of the taxi business in the city? I doubt it. In “Geoffrey Moore speak”, had the San Fransisco taxis used Systems of Engagement to improve the “business operations of ordering and taking a taxi ride”, Uber’s business model disruption attack would not have been anything like as effective. 

taxi.jpg

I was at a Digital Transformation event in London a couple of weeks ago. I was hugely impressed by some of the “digital disruption stories” I heard here:

A very successful online clothes retailer was running a series of experiments, using digital technology to make it easier to select clothes and return clothes should they not suit. 

In the UK, there are “the big six” utility companies. And then there are series of “incumbent attackers”, trying to grab business from the big six. One of these attackers was at the conference. This company is using all kinds of digital technology and applications make it easier to monitor energy use and to make our energy use more efficient. In other words, they are using digital technology to mount a “business operations Systems of Engagement attack” on the big six. Like the online clothes retailer, they know that some of these digital attacks won’t work; but they will keep trying. In “digital disruption speak”, these companies are constantly and continuously running experiments to cause digital business operations disruptions.

The last example is an Australian company called Localz. Localz specialises in using location services to cause digital operations disruption. They are working with a number of large UK and Australian retailers to make it easier to shop with them. I estimate that for every four business operations improvements that “work” in the eyes of their customers, one will “fail” - the retailer won’t like or their customers won’t like it.  

 

Want More?

I curate a scoop.it page on digital disruption. Myself and my collegues tend to post a couple of times a week on the goings-on in the world of digital disruption. 

If you'd like to see what else I've written on digital disruption, then please go to this scoop.it page.

Mike Shaw
Director Strategic Marketing

twitter.gif@mike_j_shaw
linkedin.gifMike Shaw

0 Kudos
About the Author

mikeshaw747

Mike has been with HPE for 30 years. Half of that time was in research and development, mainly as an architect. The other 15 years has been spent in product management, product marketing, and now, strategic marketing. .

Labels
Events
28-30 November
Madrid, Spain
Discover 2017 Madrid
Join us for Hewlett Packard Enterprise Discover 2017 Madrid, taking place 28-30 November at the Feria de Madrid Convention Center
Read more
See posts for dates
Online
HPE Webinars - 2017
Find out about this year's live broadcasts and on-demand webinars.
Read more
View all