In 1995, the Harvard Business Professor Clayton Christensen introduced the theory of disruptive innovation. Ever since then the term has gained popularity, and today the expression has turned into a wide term for describing innovative companies. The desire to disrupt is strong among entrepreneurs who constantly launch "the new Uber for an industry", but only a handful understand the true meaning of the concept.
According to Wikipedia, disruptive means "An innovation that creates a new market by providing a different set of values, which ultimately (and unexpectedly) overtakes an existing market". We are all familiar with how the affordable Ford Model T replaced the horse-drawn carriage and the sharing economy's impact on the modern hotel and taxi industry.
With the rise of so-called disruptive companies, many businesses have the perception that there are only two alternatives left - to be disrupted or to disrupt. Because of the growing concern, I would like to share my view on disruptive innovation and what it truly means to customers.
To be disrupted or to disrupt
Let's agree that a disruptive innovation creates a new market by providing a different set of values. In its early days, Airbnb didn’t compete with either Hilton, Best Western or Marriot. Instead, it realised that there was one forgotten segment of travellers who rather slept on a strangers’ couch than paid for hotels. Based on that customer insight, Airbnb built a scalable platform, which within a few years became the world's largest accommodation provider.
Uber, Alibaba and Amazon all have the same fundamental values, they offer a solution that solves an authentic problem for a segment of customers. For me, that is what disruption is about. Truly understanding the customers’ problem and come up with genuine solutions. Let us for a moment rephrase what a disrupting company can be. "It is a company that dominates a market by fulfilling customers’ needs based on their expectations, habits and behaviour".
I thus claim that it is disruptive to have satisfied customers. This is especially true if you’re an incumbent B2B company, which are generally suffering from declining customer satisfaction. I firmly believe that B2B-companies that provide genuine solutions based on customer needs have a great potential to become disruptors themselves. To be disrupted or to disrupt turns into a question on whether the company is product-driven or customer-centric.
Product-driven vs customer-centric
In a fast-changing economy, there is a great fear of falling behind. This worry causes a significant proportion of today's companies to be product-driven. Due to the fear that competitors will produce better products, at lower prices and with faster delivery times, most businesses are obsessed with developing and refining their products instead of listening to customer needs.
The problem is that customer demand, expectations and behaviour are shifting at an incredibly fast pace and soon your product may be redundant. Even though customers tend to appear loyal, they are likely to leave you for a newer and more innovative offer if that better fulfils their needs. Unfortunately, very few businesses are built around their customer's needs. And even fewer knows how to transform customer insight into reality.
How to become customer-centric
If you're working at an incumbent B2B company which are facing global competition, you better start listening to your customers. Start gather customer insights and come up with solutions based on their expectations, habits and behaviour. It's all about turning those insights into reality.
Understand how it is to be them Keep in mind that your customers have no understanding of your limitations. Their problems are not only present between 08.00 to 17.00 on weekdays. Whether it's about fulfilling an order, deliver the products or answer enquiries, you need to understand the customers' needs, expectations and behaviour thoroughly.
Re-design remunerations and bonus models Very few companies make customer satisfaction and loyalty the core motivation among employees. The sales department is traditionally rewarded based on increased sales, which is a short-term view of success. To be relevant tomorrow, it will be essential that customers remain satisfied and loyal. Consequently, employees should be rewarded based on customer satisfaction and loyalty.
Trust your net promotion score (NPS) No customers have time to respond to long customer surveys. If you want to catch up on how customer needs may be changing, the Net Promoter Score will give you a clear indication. It is based on a simple question: “How likely is it that you would recommend us to a friend or colleague?”.
Is it time to implement NPS in your organisation? Then, this presentation will prepare you for a successful implementation. Just, hit the button below!
Founder, CEO & Strategist since 2001. Anders provides thoughts and reflections about what and how to think about onlinification and digitalisation in B2B. Asks a lot of questions, and knows what to do with the answers.