Posted by: kenwbudd | May 1, 2011

Harness the disruption or become obsolete: Forreste

Disruptive technology is changing the way we do business. It is perhaps the CIO’s greatest challenge. And, according to Forrester vice-president and research director, Mark Mulligan, the opportunities lie not in the disruption itself, but in how you respond.

“Companies lose control of their customers when disruptive technology enables them to interact with their products and services on their terms,” he told CIOs at Forresters Empowered event in Sydney. “When this happens, revenues are threatened and companies — unless they harness this technology and develop new products and services — fail. It’s really quite simple.”

Mulligan calls this process disruptive renewal. And although it is often rapid, it doesn’t happen all at once. There are three key stages:

1. Disruptive empowerment

“This is what happens when your customers have technology that enables them to use products and services on their terms,” Mulligan said. “Think the rise of the internet, or home broadband, or smartphones and the iPad.”

2. Discontinuous change

By this stage, according to Mulligan, the new technology hasn’t just opened up new behaviour patterns, it has permanently, and irrevocably, changed the way in which customers interact and engage.

3. A choice

“Either companies harvest this disruption and learn how to build and use these new paradigms into their products and services or they fail and face terminal obsolescence”.

Mulligan argues the most important factor in consumer technology in 21st Century is connectivity. And he is quick to point out that dramatically disruptive technology hardly new; witness the rise of radio and television.

“We don’t have an exclusive on rapid technological change,” he said.

The problem for organisations is that as technology improves, people expect more from their products and services, often for less money sometimes for nothing at all. And, in the age of disruptive renewal, the customer has control.

“Good enough is just not good enough anymore,” Mulligan said.

If companies fail to respond to disruptive change, the can quickly find their traditional cannibalised by non-traditional competitors. Mulligan cites the music industry, which over the years has spent the majority of its time and effort fighting online music technology instead of trying to harness it.

“In just 10 years the disruptive of ‘free’ shattered the revenues with disruptive change — because of their response.

“It’s not the disruption that decides what happens to your company. It’s how you respond to it.”

Most companies do not respond effectively enough or quickly enough to disruptive environments and discontinuous change. Forrester asked product strategist across around the world about the issue, and 92 per cent said they think disruption will seriously challenge their products.

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