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2016 is a good year to disrupt your business model – before someone else does

Posted on Feb 10, 2016

Today, the average length of time a company stays in Standard & Poor’s 500 (S&P 500) is 15 years. Not too long ago, the average tenure was 60 years. The churn rate is so high that a S&P 500 company is now being replaced every two weeks.

The main driver for this change is the impact of technology on the way businesses operate and what customers expect. Left unchecked, lower barriers and new, digitally-enabled business models can create competitors from former customers, such as Uber and AirBNB.

Some examples of companies who have disrupted themselves and reaped significant advantage include Google, Apple, Netflix and Burberry. Examples of companies who have not and have paid the price include Blockbuster, Kodak and Nokia. Key to responding effectively to disruption includes enabling entrepreneurship and innovation within your organisation, rapid and flexible execution and customer focus. The best companies do this by creating a culture that combines these three key elements with the customer at centre and galvanises the whole team around clear goals. The proven outcomes of this approach are not just (sales) growth, but huge opportunities to increase profitability, staff engagement and operation efficiency

As a starting point, articulate your customer value proposition and test its relevance in today’s world. If you have not done this in the last five years, it’s a must-do for 2016. Develop a plan to deliver change at a pace that builds momentum without killing the existing business. Think like a start-up – how would I structure this organisation if I was starting today and wanted to compete with our current business? The right plan will draw on your existing strengths and skills, but also recognise certain new possibilities. Failing to disrupt your business model before someone else does, can cost you valuable growth opportunities or even the long-term sustainability of the organisation itself. The opportunity in doing so is not just growth, but engagement and retention of top talent and the introduction of new skills to the business.

Assyl Haider is a client director at Pitcher Partners Consulting. This was first published in Pitcher Partners Contact 2015/2016 magazine.