When disruption upends incumbent business models, it challenges many of the most basic assumptions underpinning those models. The first, and most important, step in self-disruption therefore involves challenging long-held assumptions about matters as fundamental as what your business is and who your customers and competitors are.
Here are five better questions to ask yourself.
1. What business are you in?
Disruption has a way of changing the very business that companies are in. You may have thought you were in the business of assembling steel and glass into motor vehicles – but disruption clarifies that the business you are really in is mobility.
Customers don’t necessarily want to own a car. Their real need is to get from point A to point B, which can just as easily be accomplished with a ride-sharing service. Understanding how your core activity has changed is the first step in reinventing your business model.
2. Who’s your customer?
Disruption does more than empower customers. It creates entirely new customer segments, with different needs and expectations. Understanding how the customer base has changed, and what the needs of the new customers are, are critical inputs for self-disruption.
3. What’s your value proposition?
To respond to the expectations of the new customer base, you need a different value proposition. The traditional value proposition of newspapers was authoritativeness and reputation. In a world of social media and blogs, they have had to create business models built on new value propositions – convenience, 24/7 access, customizability – to remain relevant.
4. Who are your competitors?
Responding to disruption requires making the right comparisons, including comparing yourself with the appropriate competitors. Since disruption attracts non-traditional entrants from other sectors, the peer group you used historically may no longer be relevant.
Fifteen years ago, should executives at Circuit City have been concerned about a start-up out of Seattle named Amazon? Today, should Ford be focusing on GM? Or should the company be more wary of Uber?
5. What’s the risk of standing still?
We tend to underestimate the speed of revolutions. In assessing the cost-benefit and risk of investments, we often make comparisons in the context of a world similar to today.
The more meaningful comparison, however, is against the environment that will exist in the near future, which could be radically different. In a world where everything is changing, the biggest risk is standing still.