Disrupt or Be Disrupted

The Biggest Threat to Brand Leaders Is the One They Think About Least

If you are a leading brand in your space, congratulations! You’ve accomplished a lot! It took a great deal to get there but, no doubt, your competitors aren’t standing still and continue to nip at your heels, trying to wrest that leadership slot from you. In my experience, brand leaders often worry about things like macroeconomics, political instability, PR gaffes that suddenly escalate into full-blown disasters (e.g., United Airlines and Uber) and the risk that a competitor will score a sudden home run and catch up. After all, staying on top may be even harder than getting there in the first place.

But what far too few brand leaders worry about is the biggest threat of all to their future, if not their very existence, probably because it is so hard to predict.

Technology-Driven or Business Model-Driven Disruption From Left Field

The existential threat facing most brand leaders is technology-driven or business model-driven disruption, seemingly appearing out of left field. Let’s look at a few examples. Digital cameras killed behemoth Kodak. Digital camera-makers were then, in turn, disrupted by smartphones. Traditional telecom giants like AT&T never expected that a social media company and a VOIP provider would suddenly become dominant players in the mobile telecom space, where estimates peg the losses to traditional telecoms’ texting and roaming fees of $386 billion by the likes of WhatsApp and Skype. And what about that chief disruptor of all? Amazon, an upstart online book retailer, continues to cause mayhem across the retail industry while also challenging Google and Microsoft in cloud services. What makes this type of disruption so dangerous, besides seemingly coming from left field, is the speed with which disruptors can pop up and scale, as well as the apparent lack of physical assets these disruptors need to compete against traditional market leaders. Uber and Lyft own few vehicles, Airbnb owns few if any real estate properties, and Netflix owns no stores or DVDs to loan out to consumers. Traditional automotive manufacturers are struggling to catch up to technology companies in the field of autonomous driving as private vehicle sales, the bread and butter of traditional automotive manufacturers, is endangered by self-driving vehicles. According to some estimates, efficient use of self-driving vehicles will reduce the need for private vehicle ownership in metropolitan areas by 90 percent and will devastate the auto insurance industry to boot. But disruption will not just endanger traditional brand leaders across diverse fields; it will also affect future career opportunities for people. Artificial intelligence (AI) will make all but specialists in professional fields like law and medicine superfluous. Your smartphone with smart sensors and AI will enable you to self-diagnose and treat.

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Denial of Disruption Is One of the Leading Killers of Brand Leaders

Disruptive competition doesn’t typically come from within an industry but from the outside. Accordingly, the product innovations, ad campaigns, mergers and acquisitions, etc., that fueled a brand’s ascension to a leadership position offer little or no protection against technology-driven disruption. To guard against such disruption, brand leaders need to elevate their perspective beyond doing what got them to a leadership position. They need to stay current with technology trends from outside their industry; trends that, on the surface, don’t seem to be relevant to their businesses. Beyond that, brands should consider entrusting a team to continually brainstorm how their industry might be disrupted by a startup with new technology or a new business model (without the same constraints affecting the brand). Ideally, this team works on developing potential disruptive offerings themselves and is of cross-functional composition, because most large corporations are organized into multiple divisions that, more often than not, work independently from one another. The key is not to wait until a disruptor is eating into revenue or profit. By then it is often too late as the disruptor’s momentum may prove too advanced to overcome. Other forms of protection include creating an ecosystem for your brand (e.g., Apple) as well as technological and business model barriers that create a moat around your brand. In reality, disruption is only a matter of time. So the choice comes down to this: Disrupt or be disrupted.

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Frank Schab
An experienced marketing and branding strategist, Frank has been helping clients optimize the value of their brands through insightful analysis and effective strategy for more than three decades. Along with holding positions at General Motors and Pfizer, Frank served as a Managing Partner at Interbrand New York and VP of Global Brand Research at Opinion Research Corporation before co-founding Six Degrees. His brand-building work in various sectors including hospitality, medical device, pharmaceutical, automotive and technology has taken him to 17 countries on four continents. Frank holds a doctorate in psychology from Yale University and speaks fluent German.

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