Disruption – know your customer or be disrupted

Business model disruption is top of mind for most Non – Executive Directors. The most common question I hear from Chairs; “is my business model sustainable?”. The flip side of this question is “what might disrupt my business?”. This genuine (and right) concern is one of the key reasons why I believe  corporates in Australia are lacking confidence; being nervous to be bold in case disruption is around the corner.

Disruption is largely being caused by online business models; new digital models that provide better service to customers or provide a cheaper service.  Strategy ‘converts’ know that Porter talked about one of two choices – be better or be cheaper. New online models do give organisations for the first time, the real opportunity to be both better and cheaper.

Disruption is not only created through digital means; supply chains are also being disrupted due to a range of other customer and supplier actions. The major food retailers selling $1 bread and $1 milk has created huge disruption to bread manufacturers and the dairy industry; in one move completely changing the economics of whole supply chains within an industry.

The businesses and industries that are facing disruption first, are the businesses that know least about their customers and have not developed a systemic way of gaining customer insight and knowledge.

Media and Retail are both great cases in point. They have classically treated their customers as an audience and therefore been susceptible to new business models that can treat their customers as ‘markets of one’ through individual targeting and clever analytics. A number of our major retail and media organisations have been slow to respond with their own online models or have responded by creating online versions of their traditional mode; thereby missing the opportunity to get on the front foot to create a new organisational and customer construct.

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