Disruptive Innovation in an Uncertain Market
If there is one thing businesses today have to recognise, it should be the uncertainty of an ever-changing landscape. Will they embrace this, or will they fall behind?
Speaking as a guest on Money FM 89.3’s segment “Business Forward with Canon”, Professor Boh Wai Fong from NTU’s Nanyang Business School shares some insights on why it is important for businesses to adapt and react accordingly to market changes. You can listen to the podcast here.
What is disruptive innovation and what does it mean for businesses?
One strategy commonly adopted by businesses would be to continuously improve their market position in the form of ‘disruptive innovation’. A term that originated from Professor Clayton Christensen of Harvard Business School, the word ‘disruption’ is the buzzword in today’s evolving business landscape.
Traditionally, businesses tend to centre their focus on top-end customers – those who have the most spending power – and neglect the low-end customers. Hence arises an opportunity for smaller firms to enter the market and provide innovative products and services at low cost for these low-end customers. Over time, these smaller businesses become more and more successful, with their products disrupting existing markets. Professor Boh exemplifies this with Uber and Airbnb, two highly successful companies that disrupted traditional practices in the taxi and hotel industries respectively.
What does disruptive innovation mean for consumers?
Interestingly, disruptive innovation happens so often that often comes full circle. New players enter and disrupt the existing market, then newer entrepreneurs enter and disrupt their existing market, repeating in a never-ending cycle. Such volatility does not bode well for businesses, as it may very well put their entire business operation at risk.
On the other hand, what does this mean for consumers? Professor Boh argues that disruptive innovation can benefit consumers, as it usually results in cheaper alternatives, albeit with lesser features in some instances. These cheaper alternatives afford consumers with the luxury of choice, allowing them to choose the option best suited to their needs. And with the influx of more advanced technologies, this will only keep getting better and better.
Entrepreneurs and the role they play
Innovation is often highly associated with entrepreneurs, which is a topic that Professor Boh has researched extensively about. She claims entrepreneurs play a critical role in driving innovation, they contribute by “generating new ideas, implementing these new ideas and commercialising them”.
This insight comes from her extensive research on this group of business leaders. In one of her studies, she interviewed a total of 350 entrepreneurs who were either co-founders of start-ups or existing directors of SMEs in Singapore. She found that they occupy a rather skewed demographic: most of them are under 40 years of age and 80% are males. In fact, this statistic is surprisingly similar for entrepreneurs all around the world.
Professor Boh’s study also found that a lack of resources was a key challenge that many entrepreneurs face today. Juggling innovation and the management of day-to-day operations tend to cause a strain on their manpower and/or finances. On top of this, entrepreneurs also have to deal with market uncertainties – the unpredictability of markets and regulations makes it difficult to plan for the long-term.
The “I Fail Quick But I Pick Up Quicker” Mentality
According to Professor Boh, the entrepreneurs who flourish are agile, flexible and reactive. Building on the “I fail quick but I pick up quicker” doctrine, entrepreneurs are no strangers to failure – their ability to shake it off and quickly give it another shot is what allows them to be disruptors in their respective industries.
These successful innovators often leverage on existing resources by adapting and repurposing assets in creative new ways, says Professor Boh. Seizing any opportunities that come their way, they are adept at devising and implementing a variety of options quickly. This requires them to constantly think three steps ahead at any point in time. The process might sound tedious, but it allows them to have various contingencies in place, and pick the right one when the need arises.
Indeed, it’s this forward-thinking and reactive attitude that allows entrepreneurs to succeed and embrace uncertainties. There is much that businesses can learn, especially by embracing technology which plays a part in helping them remain competitive and innovate amidst the unpredictable business landscape.
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