How the Internet of Things can help businesses exploit the benefits of disruption

I think it’s fair to claim that you are either the person or company being disruptive, or the one being disrupted, in today’s world.

Disruption often tends to have negative connotations. It invokes images of new companies or “disruptive” competitors changing the rules of a market with new products, or of new services delivered in new ways. Effective disruption, though, occurs when customer needs are met when previously they weren’t. The customer is bound to consider the new option, especially when it resonates with their own world view. And that option, and those decisions, are open to any organisation.

Effective disruption, though, occurs when customer needs are met when previously they weren’t.

Disruption doesn’t need to be seen as a negative challenge or competitive coup. Disruption, after all, is defined as a break in continuity, not necessarily anything more. It does not necessarily mean the end, simply the end of things as we have known them until now.

Examples of disruption are many and familiar. Lenovo is one itself: we bought IBM’s PC business in 2004 – a relatively unknown Chinese company buying 10% of the world’s largest computer company and the inventor of the product category being purchased.

Disruption doesn’t need to be seen as a negative challenge or competitive coup.

The other questions always asked about disruption are whether it favours the upstart or the incumbent, whether the incumbent can even respond, and what it (often a market leader) can do either to counter-disrupt, or to disrupt their segment in their own right.

In looking at that last question in particular, Andrew A. King and Baljir Baatartogtokh, writing recently in the MIT Sloan Management Review, cite Clayton Christensen’s theories on innovation and disruption. Summarising their observations, incumbents improve, but do so based on established systems and processes. This type of innovation often ‘overshoots’ the customer’s expectations. Essentially, the innovation improvement is a case of too much, too soon – in the context of a predictable trajectory of innovation. (Perhaps this is why Teslas outsell hybrids from traditional car companies). Lastly, incumbents can respond but often fail to do so, and they tend to flounder as a result of the disruption.

The implication is that, because incumbents are very good at getting the most out of their well-honed business systems, they either miss the incoming disruption, or over-do a response that misses their customers’ expectations.

Interestingly, King and Baatartogtokh go on to research these claims with academic and business managers, and the evidence about the effects of disruption are not as clear cut.

For me, the conclusion is this: incumbents do have access to data that equip them with the information they need to consider disruptions of their own, not as defences against attack but as pre-emptive disruptive strikes of their own.

That data source is the Internet of Things (IoT)

Disruptive in itself, the IoT is nevertheless something much more than another organisation’s disruptive play. It’s yours as well.

Any organisation with any kind of distributed customer base can benefit. It’s not just hi-tech companies such as GE or Rolls-Royce, which have been monitoring jet engine performance for years. It also applies to washing machine manufacturers and printing companies. And organisations should consider the Internet of Things as a new way to introduce productive disruption into their existing organisations and markets.

Adding sensors to remote devices is not the sole preserve of technology companies. Organisations of any type can deploy IoT technology to consider how disruption might play a part in future growth. If an incumbent changes the rules because it understands product and service use better than competitors, it wins at two levels: it’s disrupting on its terms, and it’s building off existing market share or leadership. What’s more, it disrupts potential or nearby players or competitors who may be planning their own strikes, but who remain invisible for now.

What can companies do to channel the Internet of Things and make disruption work?

What can companies do to channel the Internet of Things and make disruption work?

• Analyse your business to consider where disruption might strike, and more importantly where you might disrupt pre-emptively. Remember, disruption might also be an internal event – you may need to rebuild or even dismantle something that already exists (as IBM did)
• Analyse your business to consider how you might deploy IoT thinking, then IoT technology. This may not be obvious – test preconceived notions
• Consider bringing partners or competitors into your IoT planning. At Lenovo we work with retailers at various levels around the world, sometime on pilots and elsewhere on full-blown integrated retail IoT implementations
• If you are a product company, consider your own, new IoT device. Again, don’t assume that this applies solely to IT hardware companies. Amazon is channelling its vast logistics and data repository with its Alexa home system, and at Lenovo we have our own early product in partnership with Amazon. We sometimes forget that, once upon a time, Amazon “sold books” – not any more
• Bring your disruption and technology infrastructure plans together to create a strategy. Consider a pilot. If you are publisher, consider putting IoT technology into the spines of your books to track sales, use, even disposal. Imagine if you placed accelerometers into books to track how often they are picked up, hooked to a wifi router and, perhaps, a GPS system, or to users’ phones (with their permission, perhaps in a pilot). Perhaps book reading is linked to travel, certain days of the week, or is curtailed at certain times of the year. Or, if you are a film production company, use IoT thinking to track camera hire and use – which cameras are used most in certain locations? Can you cross-match this to plots or times of the year? Are there opportunities to offer your film equipment in down times to other organisations? Do you have the right equipment that users want today?

Businesses today can disrupt on their own terms, including incumbents. The Internet of Things is its own industry but it is also a means to an end. A proactive state is always superior to a reactive one. Use IoT thinking and technology to guide your own disruption strategies.