Disruptive Transition is a business strategy.
Imagine being the CEO of a highly competitive and successful $9 million business, with contracts with a number of corporations. One of your customers decides to restructure its vendor program by eliminating all vendor contacts with a high-risk profile—a company with over 25 percent of its overall business invested with another business. Because your company has 50 percent of its business with this particular corporation, this could put you out of business within six months.
You are probably thinking, “Oh, no! We’re screwed! What do we do?” But, after a few tantrums, your thinking turns into active, problem-solving mode. You say to your leadership team, “We need something that truly differentiates us from our competitors, fills in the gap of this business loss, and positions us to be successful in the future. Our strategy needs to be a disruptive transition.”
What Is Disruptive Transition?
Disruptive transition is a disturbance that interrupts and changes from one state or condition to another, creates a new market and value network for businesses and encourages change.
By the way, this is a true story.
This business owner took a leap of faith and refocused with a global strategy that specifically catered to the needs of a different industry. Instead of relying on one particular industry, he decided to transition his company’s strengths to multiple industries where they repositioned their tools and processes to support two particular industries that were starving for innovative technology.
Today, that company is doing extremely well at $15 million in revenue with 12 corporate customers across four industries, including biotech, IT, pharma and health care.
Disruptive Transition Equals Change
Tesla versus Ford is an example of disruption in the current auto industry. Tesla took the electric car to a successful mass production model (2016: 83,922 vehicles, $7B/30K employees) no new company has done this before. That was only the starting point. Like other automakers who sell components, Tesla also started selling its batteries, albeit electric, to utilities, commercial and industrial companies and homeowners, enabling customers to store energy from solar panels or energy from the power grid to be used for various purposes which is an estimated industry of $400M to $450M per quarter.
New Industry Created by Disruptive Transition
Uber versus the taxi and car rental industries is a prime example of how a business strategy of disruption has created a new industry—ride sharing. Uber’s (2016: $6.5B/6,700 employees) innovation was to do something totally different and see if the public would embrace it on a wide-scale basis. The company’s success is so prevalent that its name is now used as a verb.
When considering your strategic plans for your business or the organization you lead, think about how you can change the way things are currently done. Remember, the goal is to interrupt and change from one state or condition to another. At the end of the day, we all must ask ourselves “Do I want to be Netflix or Blockbuster? Amazon or Barnes & Noble? Facebook or MySpace?”
If you don’t commit to some type of disruptive transition, your company will not grow. Future revenue streams, at best, will simply break even.
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