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Of cutting-edge razor blades and the fine art of disruption

Monday August 27 2018
plane

All airlines have a class for premium passengers (process) but the experience that these passengers get was the focus of the disruption when some airlines pioneered flat beds and massages in the first class cabin. AFP PHOTO | CHRISTIAN CHARISIUS

By WALE AKINYEMI

There is a Gillette ad that I saw that gave a lot of insight into why the razor manufacturer which has been in operation since 1903, is still at the cutting edge of the industry a century later.

In the ad, they were promoting one product and presenting it as much better than another product. The weird thing, however, was that they were both Gillette products.

In essence, Gillette was advertising against Gillette. At what point does a company realise that it is time to take a profitable product on with another product? In essence when is product cannibalisation the best strategic move for an organisation?

The Japanese hotel Hoshi Ryokan has been in existence since 718 AD and is still in business today.

If you think that it is old, then consider Nishiyama Onsen Keiunkan, which is a hot springs hotel in Hayakawa, Yamanashi Prefecture, Japan. It was founded in 705 AD and is still in business.

The Antinori family of Italy has been producing wines since 1385. What does it take to be trans-generational? How did companies like Kodak miss the memo? Where did a company like Yahoo that had a headstart in the search and e-mail world drop the ball in less than 30 years?

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So, can we say that a company like Hoshi Ryokan has stayed relevant while companies like Kodak or Yahoo did not? Emphatically yes. In that case, what then are the factors that govern and ensure relevance?

Perhaps it is the same thinking that inspired Bill Gates to say In his book, Business @ the Speed of Thought; in three years, every product my company makes will be obsolete.

The only question is whether we will make them obsolete or somebody else will… One day somebody will catch us napping. One day an eager upstart will put Microsoft out of business. I just hope its 50 years from now, not two or five.”

Now the interesting thing from this quote is that even if the product continues doing well for 10 years, in the minds of the creators it died after three years and as such they are on their feet working on new value to ensure long-term sustainability and relevance.

When is a good product ready for replacement? The thinking that seems to govern such businesses is that the expiry date of an offer as far as the producers are concerned, is not the date that the product stops being effective. It is the date that has been set even before it hits the market. This is what drives internal disruption.

At what point does an organisation decide that it is ready to disrupt itself? In 1983, Coca-Cola tried it and the move backfired spectacularly.

The then chief executive Roberto Goizueta changed the 99-year-old formula for Coke, and this led to one of the greatest customer upheavals and reactions to a corporate decision in history.

People protested and forced the company to bring the old taste back. The company backed down. The market was clearly not ready for the disruption of the Coca-Cola taste. Are all products candidates for disruption? Warren Buffet once said;

“Our approach is very much profiting from lack of change rather than from change. With Wrigley chewing gum, it’s lack of change that appeals to me. I don’t think it is going to be hurt by the Internet. That’s the kind of business I like.”

He said that no technology can change the way we chew gum. So, does this mean that there are some companies or industries that are immune to disruption? Disruption must never be limited to products. It always points to the value received by a customer. Let’s look at the three key areas of disruption.

First, we have product disruption which is the more common. Netflix and other digital platforms tearing into the markets of traditional television as we know it is a product disruption.

However, in industries where disruption does not pose a threat to the product there are other areas of disruption that can pose a threat a threat.

Process disruption is when the same product is delivered in a disruptive manner. For instance, Jeff Bezos did not write or publish books but through Amazon.com he disrupted the way books reach the consumer.

Ted Turner did not invent television but he pioneered 24 hour news with CNN. Service disruption is when the product remains the same but the connection with the consumer is the focus of the disruption.

For instance, all airlines move people from point A to point B (product). All airlines have a class for premium passengers (process) but the experience that these passengers get was the focus of the disruption when some airlines pioneered flat beds and massages in the first class cabin.

It was a major disruption in the airline business. In a world where the competition is now invisible and where disruption can come from anywhere it seems all is not lost.

Businesses are still riding the waves of disruption and turning them to advantage. Perhaps one of the low hanging fruits and quick wins where disruption is concerned is in disruptive partnerships and that is a whole new ball game, which we shall dedicate next week to discussing.

Dr Wale Akinyemi is the chief transformation officer, Power Talks; [email protected] ; Twitter @waleakinyemi

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