Disruption To Sales of Legacy Products

Does your new venture’s business model include the potential for disruption to sales of legacy products being sold by established corporations?  Is this likely to result in positive negative or confused situations?

Survey by IMD Funded by Cisco

“Business leaders believe four out of 10 top-ranked companies in their industries worldwide won’t survive the next five years”.  This according to a Reuters article by Eric Auchard that reports on a new study.  His article is “Many big companies live in fear for their future in digital age”   It describes the study, “Digital Vortex How Digital Disruption Is Redefining Industries“.  The study was conducted by the International Institute for Management Development of Switzerland with funding from Cisco.

Part of the study was the likelihood of disruption in an industry based on:

  1. “Investment in disruption”
  2. “Timing of disruption”
  3. “Means of disruption”
  4. “Impact of disruption”

Disruption to Sales of Legacy Products

From an established corporation perspective, industries with high threat of disruption include “hospitality/travel, media and entertainment, retail, financial services and consumer goods/manufacturing”.  Other risks are:

  • “Threats are coming from start-ups analyzing “big data” to offer a personalized approach to medicine”
  • “e-commerce aggregators have taken millions of customers from direct bookings with hotels and airlines”
  • “Individuals who want to rent their homes and vehicles” (Airbnb)
  • Officesharing via LiquidSpace

“Industries which …  deliver physical products or services such as pharmaceuticals, utilities and the oil and gas sectors were …. the least likely to be disrupted”.

Useful Market Disruption

From a new venture perspective; useful Market Disruption is caused by new offerings that better serve customers, grow revenue for the vendor and do not create tedious litigation or regulatory problems.

Conclusion For New Ventures

One part of a new venture’s strategic planning must be a check of your business model to assess the positive and negative potential for Unpredictable Disruption:

  1. Does execution of your business model result in interaction with legacy offerings in a manner that produces Disruption?
  2. If so how might you focus on manageable disruption for your new venture, or better exploit these opportunities?

Conclusion For Established Corporations

“while it is human nature to expect the future to look like a linear progression of the past, that thinking does not produce good predictions when the pace of change is accelerating, and is especially inaccurate in the midst of epochal transitions.”  …  “Every existing company will have to deal with this common economic problem: how do you build an effective organization in a time of continuous disruption — one where the old rules and structures no longer work.”  …   “the average life of a company on the S&P 500 has declined to about 15 years from 65 since the 1920s” according to The Global Startup Ecosystem Ranking 2015 by Compass.co (formerly Startup Genome) with the support of Crunchbase.
Established corporations should perform periodic reviews to determine how much exposure they may have to Disruption to Sales of Legacy Products due to such new offerings.  Such reviews should address:
  • Barriers to creation of competitive offerings
  • Strategies to migrate existing offerings to stronger positions from a competitive perspective
  • Cost – Benefit issues

Carverlon Ltd and our business partners are available to assist in such reviews.  Please Contact Us

Conclusion For New Ventures

There is opportunity!  Enjoy!

Please See Also

The related Post  “Useful Disruption Versus Unpredictable Disruption

 

 

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