Video killed the radio star, or so the song goes. Uber forever changed the taxi service. Expedia revolutionized the travel industry. Amazon has changed retail forever.
As technological advances continue, business resiliency and crisis management can make or break an organization’s ability to survive a major disruption.
Dave Hartman, president of Hartman Executive Advisors, a Timonium-based firm that assists middle market organizations with IT business strategy, says that prudent business leaders know that crises are today’s reality — whether it’s a cyberattack, data breach, natural disaster, product recall or major industry disruption.
“When it comes to disruption, companies either fear it, follow it or fund it. Every single industry is being disrupted, but how they respond will determine their survivability,” says Hartman.
Fear could also be described as denial. Businesses who deny that disruption won’t happen to them, will most likely falter. Those that follow, tend to fare better as they educate themselves on the changes and can attempt to adjust their business models. Those companies that fund continue to boost disruption.
Keith Spillane, vice president of finance at Roland Park Place, a senior residential community and a client of Hartman, has taken the “follow it” approach, which has resulted in modifying their business model.
“Senior living, traditionally, is not a very innovative or disruptive industry. However, baby boomers are now in their 60s and 70s and looking for retirement communities that offer modern conveniences and amenities,” Spillane said.
“To respond to this demand, we’ve shifted our focus from that of a health care-only model to one that blends health care with hospitality, in order to improve the senior living experience for residents and provide the conveniences they’ve become used to in their everyday life. Innovation doesn’t have to break the bank, but it does require forward-thinking to respond to industry disruption and customer demand.”
Michael Schuler, principal owner of Schuler Investment Services, has also seen firsthand how disruption can change a business model. Online services such as e*trade have leveled the playing field for those wanting to buy and sell stocks — but without the asset minimums and hefty commissions. With e*trade, for a flat fee of $4.95, an individual can buy and sell stocks online — no matter the amount being invested. As a financial adviser, Schuler’s commissions start at $150 and the price goes up as the dollar investment amount increases.
“I simply cannot compete on the transactional cost of that price,” Schuler said.
What he can provide, however, is the knowledge and analysis to help clients make educated stock decisions. But even those analyses are in jeopardy.
Schuler believes that the biggest threat to the investment industry today is “robo” advising — a computer software program that uses mathematical algorithms, based on questions an individual answers, to compute data model assets. While he believes older generations are not comfortable with a computer giving investment advice, he thinks in 10 to 20 years that will be the norm for toyounger generations.
“The millennials that are growing up are completely comfortable with the Internet and doing things themselves — all online. Where’s my job going to be?” Schuler says. “Larger institutional clients will always pay for service, but as technological advances continue and preferences of younger generations take over, full services of an advisor like myself may not be needed.”
That’s why Hartman advises that businesses recognize how their industry is evolving and look for ways to innovate and leverage those changes.
“Business sustainability for the short and long term depends on having the right contingency strategies in place to prepare for and respond,” Hartman said.
For example, he says, a high-end car service company may want to utilize and leverage the convenience and accessibility that Uber has created. This would allow clients to secure their services through an app, but the traditional value and service clients are familiar with are not sacrificed.
Jay Steinmetz, CEO of Barcoding Inc., an automated data collection firm based in Baltimore, says his company systematically dissects whole systems — in other words, his business is disruption. Through automated data systems, such as barcoding, RFID, Bluetooth and artificial intelligence technologies, Barcoding has embraced technological changes and has assisted companies in adapting to those changes.
“Technology is changing the need for things, and disruption is eliminating the need,” Steinmetz said.
Essentially, he says, his company is setting up systems that are removing human beings in the process. But he doesn’t see the advancement of technology as a job eliminator. He sees it as matching the needs of the market and a necessary tool for improvement.
“We are disrupting all the time. But we are also adding value and creating efficiencies. Technology allows us to give more options, and flexibility,” he said.
Three things are certain in this world: death, taxes, and disruption. So what can businesses do to survive the inevitability of disruption?
“First, recognize how the industry is evolving, and how it’s being disrupted. Then look at the competitive landscape and see how you can innovate or leverage to your benefit,” Hartman said.