It is not all doom and gloom because not all disruption should be viewed as negative. For example, globalisation and technology has opened up a new world of opportunity for many SMEs.
The recent comment by The Hon Fiona Nash, Federal Minister for Rural Health: “If you do not disrupt your business yourself, someone else will” in many ways summarises the future facing every business enterprise, across all sectors. The reality is that change driven by disruption of one form or another is impacting on every business. There is a lot of talk at the moment about digital disruption. However, change is not limited to this domain. The impact on an enterprise’s business model can involve change linked to many elements of the market, including the way in which an enterprise promotes its goods and services, how it delivers those goods and services, or it may even challenge the whole business model itself.
In some circumstances, the change will cause certain markets to no longer exist – the video shop is a prime example – the traditional model championed by Blockbuster was challenged by the likes of Netflix’s mail order DVD service, which in turn was disrupted by Netflix’s online streaming services in the quest to provide greater convenience to consumers. Blockbuster’s sunk investment in bricks and mortar effectively hampered its ability to respond to Netflix’s (and similar competitors’) disruptive business models and technologies.
Another sector experiencing the effects of disruption right now is the taxi sector, which is undergoing enormous change as a result of the ride sharing services such as Uber and Lyft. It is not all doom and gloom because not all disruption should be viewed as negative. For example, globalisation and technology has opened up a new world of opportunity for many SMEs, giving them access a wider market without geographical boundaries and lower cost resources. Any changes to the market a business operates within – whether positive or negative – requires a strategic and long-term view to be taken, and potentially also a different way to deliver services that may have applied in the past. Our experience in working with many leading small businesses dealing with disruption is that they need to consider:
- How can the latest technologies be successfully utilised in your business to deliver cost efficiencies, alternative sales channels and better customer experiences.
- Challenge your own business model and consider a range of scenarios to avoid the “Blockbuster” moment happening to you.
- Engage with your customers to get their thoughts on how to improve their experience with your business.
- Use services like Google analytics to ensure you are gaining constant feedback and responding accordingly.
- Look at both competitors and other industries for ideas on how to bring innovation into your own business.
Our experience is businesses who engage an adviser who can bring in new perspectives and outside ideas can challenge the business owner and in so doing help them respond to strategic challenges and commercial opportunities.
Russell Postle, Private Clients Partner, BDO
