Virtually every industry is feeling disruptive effects – from banking, to travel, to supermarkets. The music and creative industries, in particular, have experienced the 'perfect storm' of disruptive forces, including digital technology and generational changes in consumption.

Disruption is nothing new. The term was popularised by Harvard Professor Clayton Christiansen in 1995 in the article “Disruptive Technologies: Catching the Wave“, and elaborated on in his best-selling business book “The innovators dilemma”.

Disruption is effectively a more violent form of competitive innovation. What Christiansen called ‘new market disruption’ occurs when a new product meets a new customer need – or even better – creates customer desire – like Apple did with the iPod and iPhone.

In the music industry for example, the well-known disruptor is Spotify, now very much a household name. Spotify crashed into the music world in 2009. It grew at speed, in a business with notoriously high barriers to entry (music rights is a complex and expensive proposition) and with a model that few consumers had yet to adopt (in 2009 most music fans were still downloading, or even still buying discs, and had low awareness of the benefits of streaming).

Spotify is remarkable. I have often referred to it as a ‘miracle business’ – because what it did was hard to achieve, but what it delivers to its customers is truly miraculous.

However, as the current global market leader in streaming, Spotify is suddenly no longer the disruptor, but the incumbent.

In just five years, the landscape of how we consume music has changed for good.

This is what real disruption does. It forces us consumers to ask the most primal questions about marketplaces. For example, what do ‘music retailers do now that we get our music online’?

What do travel agents do that we can’t do ourselves, using online booking tools?

And soon, we’ll be asking – what do banks do – especially with new ‘fintech’ services popping up all over the globe?

This is the question incumbents, from HMV, to Thomas Cook, to Barclays, need to ask of themselves. The answer lies in customer value, but also in how to change and just be better. Is the best strategy to ‘disrupt thyself’, before others disrupt us?

Little is known about how to cope with disruption – or managing disruption. What strategies are advised and how to execute? What sort of business response is most effective? What sort of leadership capabilities are required, and how are they effectively mobilised in order to capture new opportunities brought to market by disruptors? It’s a blind spot for many business leaders at the moment, but as an area of expertise, it will need to develop massively over the next few years.

 

By Keith Jopling, Senior Vice President at KAE. 

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