Established companies need to both defend their core business and attack the disruptive opportunity.
Responding to disruption takes two strategies: “You have to defend the core business with one strategy and attack the disruptive opportunity with another”, Costas Markides, Professor of Strategy and Entrepreneurship at London Business School told an audience at the student-led Strategy Summit. “How do established organisations react to disruption? They defend their core business and attack the disruption”. Altogether, there are five takeaways:
1. Develop a clear understanding : What exactly is the disruption shaking your market? What is the impact on your uniqueness of positioning, your creation of customer experience and your management of innovation ?
2. Create a sense of urgency. Make the need for change both personal and emotional in your organisation
3. You need to see – and frame – disruption as both a threat and an opportunity
4. Forget your core business and think like an entrepreneur in order to come up with ideas about what to do
5. Avoid imitating the disruption. Instead, disrupt the disruptor.
Speaking about disruption in the watch industry, connected watches present both a threat and an opportunity. They may be a threat for the iPhone because people will eventually take calls on their 4G watch. And they become a threat to electronic watches if electronic watch makers don’t move and the high-tech connected watches prove successful.
Watch makers can adopt the two strategies. One way to fight is to create a high end connected watch. The difference between a Swiss Connected Watch and a standard connected watch is huge. The Apple Watch for example looks like a phone on the wrist. A Swiss connected watch looks like a real watch.
Bringing out a connected Swiss watch may just be the first step, the “protection” strategy. The second step would be to bring in other assets and functionalities which then provide the opportunity. Such an asset could be for example a modular connected watch which allows people to change the model. If you don’t want to wear your connected watch, you take the electronic module out and change it for a mechanical module. It’s like when you buy a camera, you have different lenses: the watch comes with the option to buy it with one lens or another.
Bringing in other assets and functionalities is one of the ways to take advantage of the opportunity offered by the tech space with something new and unique while holding onto the long-held brand of high-quality, Swiss-made luxury. It lets people buy into the connected world now, without having to throw all the existing customer experience out.
Source: Adapted from London Business School.