Big Bang
Disruptions: Everywhere!! Even in Automobile Industry Supply Chain Management!
Big
Bang Disruption, mentioned in a book by Paul F Nunes and
research fellow Larry Downes, is a
new and lethal disease that kills businesses through large-scale fast-paced
innovation that can go global all at once (2). Big Bang Disruptions are
products and services that are better and cheaper when they enter the market. It
is everywhere and if not, then the time is not far away for any industry to be
disrupted by it. The time has come for everyone to rethink the approach to the
strategy. It has the power to obliterate the entire market at once.
According to Professor Clayton, there are two
types of innovations: Sustaining technologies, incrementally improved existing
products and disruptive technologies. The big thing about BBD is its fastness
and scale. On the other hand, traditional disruption, Innovator’s Dilemma,
mentioned by Clayton Christensen in 1997, is also another dangerous disease,
but it happens slowly and operates step by step. The “innovator’s dilemma” is
that “doing the right thing is the wrong thing (1). If the company misses the
opportunity to take everything into perspective rather than concentrating on one
thing, the market for disruptive innovation is created. No company/Industry can
escape from BBD. It’s inevitable and also defies the traditional approach of
strategic planning. Disruptive technologies attract margin customers due to
their underperformance in the market but once the product keeps improving with
time, they become the real time products/services for the main market. The idea
of handling the new technology on having some time in hand without
cannibalizing the own market is the Innovator’s Dilemma.
I like this topic because of the intensity how
can any innovation disrupt the entire market. It has penetrated almost every
market and industry such as electronics, manufacturing, healthcare, hardware,
software, and global networks. BBD product or service has many qualities that
is: cheaper, quicker, smaller, personalized and convenient. Because of all
these qualities, customers tend to go for this market, leaving incumbents that
gives very less time to react that leads to collapsing of supply chains.
I will
be talking more about how BBD had spread across the automobile industry.
Google, and apple maps, when introduced, are cheaper and better (integrated)
than paper maps. Due to these smartphone apps, People don’t need to buy GPS
navigation devices because it became easier to navigate through these devices.
The innovative companies realized that customers already have smartphone
devices with faster Internet. These navigation app companies will be competing
in the software world. The software can be duplicated many times, if written
once with zero marginal profit. All the focus could be directed to advertising
the product/service. This android and iPhone market brought down the market
share of stand-alone navigation devices. This also happens due to the shift of
existing customers to the new market and the existing technologies don’t get
enough time to respond. Disruptive
technologies have suddenly become much more devastating, and much sooner. It is
a nightmare for the innovators.
The
actual reason behind BBD is exponential technology, which has unique economic
properties, better and cheaper, and also powerful in terms of improved
performance over a period of time than the existing products. Everything is
improving and digitalizing. This makes the industry/company more exposed to
BBD.
The
automobile industry has also been disrupted by BBD. The car has processors
ranging from 30 to 80. Each specialized with some high-end functions such as
voice recognition, assisted parking, braking transmission. The future of cars
is more autonomous or self-driving. The computerization is just one of the
example in automobile. It has also reached to metals and materials, which are
improving exponentially, leading to lesser defects and maintenance problems.
The exponential technology has gone to alloys and other raw materials such as
fuel, roads etc. EBay alone sold some 4.3 millions used cars.
It is
not just the vehicles but also their consumers have been reshaped by
exponential technologies. They got more resources and knowledge to research,
negotiate, and purchase using Internet. Now, customers can pull the information
from other consumers whenever they want on price, quality, and customer
service.
The new
computing technology has also altered the car usage. The innovation technology
has reinvented the idea of public transit, including Zipcar, Uber, Lyft. These
new services improved the efficiency by keeping the cars on road for most of
the time. This also leads to fewer car sales and traditional rentals.
There
are still many opportunities that could be explored by dealers and suppliers.
Recently, I had to purchase car and I had to go to thousand different websites
to collect information and also find the better deal. If the suppliers and
dealers could bring some technology to ease out the process of finding all the
information at one place, they could easily be benefitted by lot of profit but
if left unnoticed then it could bring someone else to bring their innovative
technology. It’s all about the information exchange that makes one powerful.
According to the BBD book by Larry Downes and
Paul Nunes, there are four stages of BBD. (a) Singularity; (b) Big bang; (c)
Big crunch; and (d) Entropy. The graph depicts the length of the period of
singularity (i.e. experimentation), the shortness of the exploitation period
(the big bang itself) and the rapid decline or big crunch, which can be almost
as steep as the big bang (4). The success of big-bang disrupters is driven by
easy access to opinion, facts and comparison data, which is something closer to
consensus.
BBD cannot
be avoided but strategic approach could be taken. The BBD phase could be
handled by:
1) Survive catastrophic success
Scale up and redesign the technical and business architecture
while operating at full speed.
2) Capture winner-take-all markets
Give up short-term profits to win all the market. This could
then be leveraged to create followed on products that could be created and
launched faster than original.
3) Create bullet time
Judiciously employ litigation and legislation to slow the
progress of disruptors, even as you proceed with your own experiments,
partnerships, and well-timed acquisitions (4).
Automotive
Industry’s supply chain is fully disrupted and reshaped by exponential
technology and BBD. Disruption
may come not from traditional competitors, but from companies outside the
industry—perhaps even software-based startups. The transformation is
already happening. The question is whether the next car is better and
cheaper than the last one? If not, how many rounds of exponential technologies
it will take to bring that design and efficiency?
This topic leaves us with several interesting arguments and questions.
1)
Why does BBD need to be disruptive?
2)
What is the way to handle it or get
around with it?
3)
What industry/service could be protected
by it?
4)
What industry/service is next on the
list?
5)
How BBD will change the future in terms
of technology?
6)
Will it always be disruptive?
Sources:
4)
http://www.forbes.com/sites/stevedenning/2014/01/07/businesss-worst-nightmare-big-bang-disruption/
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