Why Businesses Fail: Disruption

'Failing to plan is planning to fail' - Benjamin Franklin

Before February of 2009, the taxi industry was cruising along in an extremely profitable way.

While there was careful regulation from city officials who handed out licenses and medallions to fee-paying drivers, there was also a vibrant economy and the potential to make large sums of money; so long as you were willing to put in the hours. A small handful of set their own prices and dictated to the consumer how much a fare would be; things were looking perfect for executives of those companies, and drivers alike.

Then, just a few weeks later in March of 2009, a small company based out of San Francisco launched an application that was at the time completely unknown: Uber. The rest, as they say, is history. In the first quarter of 2014, according to statistics cited by Forbes “ride-hailing was a mere 8% of the business.” By the first quarter of 2018, however, “ride-hailing had grabbed 70.5% of the market.” Not only did this massively disrupt the taxi industry, it also snatched a huge proportion of the rental car share of the ground transportation market.

The major disruption in this instance wasn’t just the fact that Uber had created an application that allowed it customers to order a ride, monitor the progress of their driver and rate the cleanliness of the car and the service they received. On top of all these new innovations, Uber was able to side-step many of the regulatory hoops that the taxi industry had to jump through.

Anticipate Disruption

One of the best ways to plan for the future is to believe that your organisation and your wider industry will at one time be disrupted. You don’t have to identify exactly how, when or why your organisation will be disrupted - although this would be an extremely effective exercise in terms of improving your operations - but you should be operating with the knowledge that it can potentially happen...rapidly too.

Even if it doesn’t, taking the initiative to plan for the future is an essential part of what your management system is attempting to inspire you to do: account for things in the future that can potentially go wrong.

Management Review & SWOT Analysis

Take the time to discuss this with not only your executive team, but all the boots you’ve got employed on the ground. At times, some of the best advice will come from lower down in the food chain. One of the best tools for your executive team to use in this instance is a SWOT analysis. Outlining your strengths, weaknesses, opportunities and most importantly in this context, your threats will better prepare your organisation to tackle the future. Each and every industry is vulnerable to being disrupted- no matter what your market share or your organisation’s unique point of difference, you remain at risk simply by existing in the market.

One of the most under-leveraged, yet effective means of inspiring change in your organisation and future-proofing your operations is through a SWOT analysis, so if you’re not already taking the time out- now’s the time. A SWOT analysis is intended to be a data and fact-driven look all the conceivable variables around your business, taking into account things going right, and likewise, things going wrong. What could potentially go wrong? How will you clean up the mess? How likely is this to happen? A risk register is also an essential tool to combat the risk of being disrupted by a competitor, and will inform your decision making when you’ve done the subsequent work in putting together the findings from your SWOT analysis.

Be the Disruptor

It’s also worth mentioning that when you’re exercising the principles of a SWOT analysis, in the strengths and opportunities sections in particular, this also gives your organisation to be the industry disruptor, rather than the victim. It sounds slightly predatory in nature, but that’s the reality of doing business. If you take a close look at your strengths and look to continuously optimise these, you’ll start to inform your opportunities for the future. Perhaps an investment in a new technology, contacting a new supplier, or looking to serve a certain segment of the market that your organisation was previously not interacting with will help you to future-proof your operations and be more robust moving into the future.

Whatever the outcome of your SWOT analysis and the formation of your risk register, inform everyone in your business of its existence, get their feedback and also their input; as we’ve said before, sometimes the best advice you can get is from the feet on the ground in lower positions. Remember, don’t allow complacency to seep into your practices; it’s a dangerous thing, and can ultimately sabotage your organisation as you move into the future.

Try to stay a step ahead of the game- even two.

Best of luck,

Kobi Simmat.

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