The definition of digital disruption is the change that occurs when new digital technologies and business models affect the value proposition of existing goods and services.
Vrij Harry is a disruption disciple. The managing director of Harry’s Printers is a self-confessed addict, and his stimulant of choice is digital disruption.
Harry was invited to present a paper at the 6th Quadient service providers executive board meeting, which took place in Switzerland in February. Unsurprisingly the “Disruption Disciple” chose to talk on the issue: “A fresh view on digital disruption.”
On Tuesday, Harry gave the same talk to a group of business people in EL, which included anecdotes from Quadient’s executive advisory board. “If I look back on my career, knowing what I do today about disruption tactics, I would’ve been fired very early on in my career.”
The comment followed a slide titled “The challenge of dualism and structure”.
Modern advice is to sustain present success, and Harry’s Printers, established in 1929, employs more than 200 people during its busy periods and has spun out into five business units, with a sixth on its way. Today disruption drives the company.
He said it is difficult focusing on future business opportunities, especially if current businesses demand one attention. However, it is essential to do just that.
“Framing a phenomenon as a threat elicits far more intense and energetic response than calling it an opportunity. If an innovation is termed a threat, the top-level staff will commit to solving the problem. The solution could then lead to an autonomous company,” he says.
Harry says South Africa’s Naspers/Media 24 is one of the globe’s best examples of disruption in action. The stodgy 1990s printer and publisher took a radical decision to keep printing but to focus investment strategy on international cable TV, IT and internet. Today the traditional business accounts for 5% of revenue and profits, while the current market cap is $114-billion.
“Koos Bekker, who drove the changes, has a personal net worth of $2.2-billion, leading a company that had the courage to think out of the box.”
Quadient’s philosophy is that CX (customer experience) is the new battleground for businesses, and the bar is being set by fast moving, innovative organisations. It is the fastest growing customer communications management provider globally, supporting thousands of clients and partners worldwide in the financial services, insurance and service provider industries. It has 6,000 customers.
Harry said that deliberately formulated strategies are outperformed by half-baked, partial ideas. Harry’s research showed the founders of over 90% of successful businesses did not end up using their own carefully formulated strategies.
The role of senior management in the 4th Industrial Revolution, the hive of disruption, is to be aware of technology and business model innovations, because this is often where improvements for the future are incubated. Management must have a long-term responsibility to build disruptive growth engines, which are capable repeatedly launching new ventures. It should develop a nose for disruption.
Harry said that the vast majority of firms that successfully caught the waves of disruption were still being run by the founders. Only a few companies were run by professional, non-founder managers.
Many successful firms have disrupted once. A few, such as IBM, Intel, Microsoft and Hewlett Packard, have done it twice or more, while Sony did it repeatedly between 1995 and 1982.
The key lessons:
• Launch new growth businesses regularly, when the core business is still healthy.
• Keep dividing business units, so that the new innovative businesses are small enough to benefit from investing in small opportunities.
• Minimise the use of profit from established businesses to subsidise losses in new business...