Surviving Digital Disruption – A Blessing in Disguise

In 1997, VHS tapes and DVDs were disrupted by the advent of Netflix. Some years later, smartphones killed the usage of landlines and payphones together. In developed economies, vending machines have bid farewell to the small-store sector, and online delivery is close to shutting down restaurants as well. No matter where we look, digital and technological disruption seems inevitable. With disruption knocking on the doors of every industry, how do businesses make sure that they aren’t the ones going extinct when the time comes?

Is digital disruption something a business should fear? Not always. In this blog, we will explore how digital disruption led some businesses to actually perform better.

How can a business deal with Digital Disruption?

When a business is assessing the risk of digital disruption to its operations, a business can be faced with problem statements like the following – 

1. Apart from keeping track of all technological advancements in their industry, each business needs to ensure they are prepared to transition to a phase beyond the disruption. Does the company have enough money, workforce and the infrastructure to carry out the transition? 

2. If a disruption has begun, where do your peers stand with it? Have some businesses already begun adapting? If yes, then how are they dealing with it? Is there an opportunity to learn from them?

Gartner has devised an action model that presents companies with six choices on how they can approach digital disruption – 

1. Analyze the competitor’s actions;

2. Attack the disruption;

3. Alternative market opportunities can be pursued;

4. Ally with businesses handling the disruption;

5. Acquire the businesses with the tools to handle the disruption;

6. Avoid the disruption altogether.

In this article, we will explore some of these choices applied in real life businesses.

Alternatives and Avoidance

While digital disruption swept over the camera industry, digital cameras and video cameras were left behind by smartphones with cameras. So much so that as of 2019,  an iPhone 11’s camera quality was considered scarily close to that of a DSLR camera. However, one type of camera survived this disruption and evolved to become a status symbol – the polaroid camera.

The world’s first polaroid camera came from a company of the same name in 1937. While it controlled the instant camera market in the 70s, digital photography disrupted its success, until 2017, when a change of ownership led to a rebranding of the company.

Today, polaroid cameras are considered to be an icon of the vintage aesthetic. By staying true to its identity, and using its rich history to create an aura of nostalgia around its products, Polaroid did what many companies couldn’t – it pursued an alternative direction in the business and survived disruption, mostly on the power of the nostalgia it gives to people.

In comparison, Blockbuster video, which was toppled over by Netflix and online streaming, has only one store today in Oregon, USA, that too, which is often let out as an AirBnB. Could the right play on revisiting the past have helped Blockbuster video survive? Not necessarily. Blockbuster completely avoided the disruption and got defeated by its inevitability.

Polaroid survives on nostalgia, but it also survives on technology that is just as relevant and advanced today as it was when it came out in 1937. However, Blockbuster sold VHS tapes and DVDs, the technology for which was also disrupted by digital streaming and smart TVs. Thus, it is essential to remember that digital disruption cannot be survived if its technical support goes extinct.

Analyzing the markets for inevitable disruptions

Since the onset of the global pandemic in 2020, the education industry has had to undergo one of the fastest offline-to-online transitions. It’s safe to say that schools and colleges have survived because of the digital disruptions in their industry – if it wasn’t for platforms like Microsoft Teams and Zoom, there would be no way to teach students as long as the pandemic was in its strongest tides. 

Zoom, a platform founded in 2011, reached the zenith of its success at a time when not many businesses were doing so well – By February 2020, Zoom had gained 2.22 million users in 2020 – more users than it had gained in the entirety of 2019.

However, how long can online classes survive without the holistic aspect of being taught face-to-face by a teacher, in a class full of students? Is work-from-home much better than working in a physical office? The debate of virtual vs physical is what a business needs to carry out to understand if digital disruption will do any good to them. The better such platforms analyze their space, the more opportunities they will find to get the best out of whatever disruptions come their way.

Conclusion: Changing perspectives on Digital Disruption

There are many stories of failure due to disruption, but there are as many successes as well. A business’s approach and strategy towards digital disruption will matter for it in the long term. It is essential for businesses to make the best possible choice instead of completely avoiding the possibility of any disruption – to analyze and approach every possible choice and come out of a disruption as a better and stronger firm.

About the Author

  

Simaran Sinha

An avid reader with an interest in business research, personal finance and investing.