Disruptive Change: Definition, Examples and How To Manage
Updated February 3, 2023
All businesses and workplaces experience change, but some changes are more impactful than others, such as disruptive changes. Disruptive changes that happen because of or contribute to adjustments in consumer expectations can have a profound influence on how various businesses evolve. Understanding the principles of and factors affected by disruptive changes can help company leaders proactively adapt to these alterations.
In this article, we discuss what disruptive change is, provide some examples, explore how disruptive changes can affect organizations and offer guidance on how businesses can adapt.
What is disruptive change?
Disruptive change occurs when the fundamental concepts and processes of an industry or business start to shift. While small incremental changes allow businesses and their employees to slowly adapt over time, disruptive change often requires high-level strategic responses from company leadership to ensure their company can survive long-term.
When disruptive change happens, current products and work systems can lose value because of the new cultural expectations or technical developments. Disruptive change influences the way that businesses interact with customers and their employees.
Disruptive innovations frequently cause disruptive changes. Disruptive innovation is the idea that the invention of a new product can disrupt an entire market, changing what consumers want out of a business or what employees expect from their employer and vice versa.
Business owners must adapt to disruptive innovations and change to prevent their company from failing and to become competitive with new market expectations. Disruptive change can eliminate the need for one market and create completely new markets, such as the rise of the internet making blogs profitable while decreasing newspaper sales.
Examples of disruptive change
Here are a few examples of situations that demonstrate the impact of disruptive change:
Cars: While automobiles had already been available to the upper class, the Ford Model T made cars accessible to the public and impacted general consumer buying habits and lifestyles.
Streaming content: The popularity of video streaming changed the movie rental business and resulted in success for businesses that focused on monetizing web streaming.
Sustainable practices: Changing social values have pushed many businesses to emphasize sustainability and equity in their company to align their values with current social movements.
Ridesharing apps: Ridesharing applications disrupted the transportation market by changing the way that people schedule and use private transportation.
The internet: As a new channel for doing business and consuming media, the internet provided businesses with the opportunity to adapt to the consumer's expectations and find new uses for their products.
Ways disruptive change affects business
There are several ways that disruptive change in a market can influence a business, depending on the way that an organization anticipates change and responds to warning signs of disruptive change. These include:
Disruptive change can decrease demand for a company's services, increase research costs or drive down the price customers are willing to pay. Businesses that respond to disruptive change may be able to capitalize on the new market and increase profits. By contrast, businesses that try to maintain the former status quo may be more likely to lose money.
Products and services
Some disruptive changes can affect make products or services less relevant or even obsolete. When a disruptive change occurs, businesses may need to change their product or service offerings. This might include creating new products, discontinuing existing products or finding new uses for their current offerings.
Disruptive change can also affect the systems and procedures a company uses to operate. In some situations, this occurs because the disruptive change relates to fundamental technology that most companies rely on to interact with vendors, clients or partners. For example, a business might need to change its machinery, communication systems or logistics.
The type of consumers, employees and business partners interested in a business may shift after a period of disruptive change. Public perceptions of a business's values can impact all business relationships if that company's business model no longer aligns with societal expectations. For example, some organizations may want to alter or announce their position on a rising social movement that's affected their business or customers.
Related: What Is Innovation Management?
Indicators of disruptive change
One of the most challenging parts of disruptive change is that it's often unpredictable. It can be challenging to determine ahead of time which innovations or social movements might eventually have a large-scale impact on the market and which changes are only short-term fads.
You can still try to prepare for disruptive change by paying attention to changes related to multiple smaller factors in your community and business. While these factors aren't always indicative of disruptive change, several of these factors happening at once can mean that disruptive change is occurring.
Here are some of the potential indicators of disruptive change:
Government and industry rules: New laws, government policies and industry regulations can have a direct or indirect impact on business operations. When more legislation related to your industry emerges, this is a sign that disruptive change has already begun to transform the market.
Limited supply chain availability: Decreased access to labor and raw materials in your industry can also be a sign that disruptive change is occurring. Vendors going out of business or consolidating into one business can be a sign of industry changes that might soon affect the companies that purchased that vendor's products or services.
Lower volume of customer interactions: When customers become less accessible to a business, this could mean that they're using new channels to make purchases or their interests are shifting because of a disruptive change. If customers are suddenly or gradually harder to reach, the underlying reason could be an impending disruptive change that influenced consumer behavior.
Decreased customer satisfaction: More customer complaints and fewer repeat purchases indicate that the customer's tastes have changed, which could reveal a larger disruptive change in the industry. If customers are no longer having their needs met, market expectations are likely changing.
Specialties entering the mainstream: When specialty products and services start being seen as essential commodities, this can be a sign of disruptive change. There's often a delay between an innovation being released and becoming easily accessible to the public in a way that disrupts business.
Changing public opinion: When societal values start to change, it can alter what people expect out of businesses and influence their purchasing habits. People's changing expectations about what they need and how they want to do business can require organizations to adapt and respond to disruption.
How to manage disruptive change
Managing disruptive change when it influences the workplace is essential for making sure that your job or organization remains viable in an evolving market. While you can't always prepare for disruptive change ahead of time, there are steps you can take to react and respond strategically:
1. Assess your resources
After recognizing signs of disruptive change, take inventory of your team's resources to determine how you can stay flexible and meet consumer expectations. This helps you assess what assets your company has that can thrive in a new context and which may need to be repurposed. Perform a resource analysis to make sure your company invests in the right areas of its infrastructure.
2. Seek feedback
Create channels for employees and consumers to share feedback about their experiences and observations within your industry. This increases the company's overall awareness of challenges within the business, making it easier to recognize when problems and opportunities start to change.
3. Study your competition
Pay attention to how your competitors operate, what new products they offer and what operational processes they use to connect with customers. Identify when new competitors enter the market or how existing competitors expand into new segments. Maintaining awareness of industry norms is essential for recognizing which strategies are most useful and responsive to change.
Related: How To Conduct a Competitor Analysis
4. Diversify your efforts
One of the best ways to keep up with disruptive change is to have multiple ongoing projects that test new ideas. If disruptive change does affect one of your major initiatives, you then already have done some research and development on possible other opportunities. Having these multiple projects already occurring can make it easier to pivot to or prioritize one project over the one that's no longer as relevant.
5. Identify new demands
Constantly brainstorm other ways that you could apply your current business resources to other situations. Although some disruptive changes may require redesigning entire processes or offerings, others might only need a business to change its target market. This can help a business remain competitive while maintaining many of its familiar operations and services or products.
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