In today’s rapidly evolving business landscape, staying ahead of change is more critical than ever. In a recent webinar Professor Kevin Morrell, Rowlands Chair in Transformational Strategy, explored the dynamics of disruptive innovation and technology, shedding light on why even the most successful companies can find themselves struggling to adapt. His insights provide valuable lessons for leaders navigating an uncertain future.
The term ‘disruption’ is widely used, but it’s important to distinguish between disruption, disruptive technology, and disruptive innovation. While disruption broadly refers to change, disruptive technology consists of game-changing innovations such as artificial intelligence, blockchain, 3D printing, virtual and augmented reality, and the Internet of Things. These technologies have the potential to reshape entire industries. Disruptive innovation, however, goes beyond just technology; it involves a fundamental shift in how a market operates. It occurs when a new product or service, initially perceived as a lower-end alternative, steadily improves and eventually overtakes established businesses.
Kevin explained that disruptive innovation follows a distinct pattern. Established companies, in their pursuit of excellence, often refine their products beyond what customers actually need. This over-servicing leaves a gap at the lower end of the market, where new entrants offer a simpler, more affordable alternative. At first, these newcomers may not seem like a threat, as their products appeal only to a niche audience. However, as they improve and gain traction, the traditional market leaders struggle to adapt, ultimately losing their dominance. This process has been observed time and again across different industries.
One of the most famous examples of disruptive innovation is the rise of Netflix and the fall of Blockbuster. In its prime, Blockbuster dominated the home entertainment industry, but its reliance on physical rental stores and late fees prevented it from embracing digital transformation. Netflix, which began as a DVD-by-mail service, gradually introduced streaming and an entirely new way of consuming entertainment. Blockbuster failed to anticipate the shift in customer behaviour, and by the time it recognised the change, it was too late. The company that once seemed untouchable became obsolete. A similar story unfolded with Airbnb, which transformed the accommodation industry by rethinking how people book and experience short-term stays. Traditional hotels relied on their brand reputation and premium services, but Airbnb leveraged technology, trust-based reviews, and flexible options to create a completely new business model. Even Kodak, despite inventing digital photography, clung to its film business for too long, allowing competitors to take over the market.
The pace of change
The pace of change today is accelerating at an unprecedented rate. In the past, it took decades for new technologies to become widely adopted, but now the process happens within years. AI-driven applications, for example, are already transforming industries. One such example is Woebot, an AI-powered mental health assistant that, while initially limited in its capabilities, continues to improve and could eventually become a viable alternative to traditional therapy. The rapid adoption of new technology creates both challenges and opportunities, requiring businesses to remain agile and forward-thinking.
Several disruptive technologies are set to reshape industries in the coming years. Artificial intelligence is already changing fields from healthcare to finance, automating processes and redefining how businesses interact with customers. Blockchain and distributed ledger technology are revolutionising contracts, finance, and supply chains by offering decentralised trust mechanisms. Meanwhile, 3D printing is enabling on-demand manufacturing, reducing costs and production times. Virtual and augmented reality are transforming retail and training experiences, while the Internet of Things is connecting devices to enhance automation and efficiency in industries such as agriculture and healthcare.
Disruptive innovation does not simply impact individual businesses; it reshapes entire economies and societies. For leaders, the ability to anticipate change is essential. It is not enough to assume that a successful business model today will continue to work in the future. Instead, companies must constantly challenge their assumptions, experiment with new ideas, and remain open to adaptation. Those who resist change may find themselves left behind, while those who embrace disruption can turn it into a competitive advantage.
Conclusion
In the webinar, Kevin concluded with a thought-provoking reflection on the future of business. The world is not heading toward a simple choice between utopia and dystopia. Instead, change is a continuous and dynamic process, akin to a relay race where companies must stay agile to remain competitive. Whether in finance, healthcare, or manufacturing, the organisations that thrive will be those that see disruption not as a threat but as an opportunity to innovate.
For those interested in exploring this topic further, your free Alumni Library Online (ALO) offers a wealth of articles and resources on disruptive innovation and technology. By staying informed and adaptable, you can navigate the ever-changing landscape of disruption with confidence.
