Product Management: Handling Disruption Part Two

Identify early and act decisively.

Over this past weekend, after being inspired by this line from The Facebook Effect by David Kirkpatrick “[Facebook] was about people; Google about data”, I wrote part one of product management handling disruption. I would encourage you to read over the post becaue I think it underscores the incredible age we are living in where the speed of technological advancement places product management and product marketing in a nearly constant state of flux. Having to identify and strategize how to handle actual or potential disruption to current business models in order to avoid the fate of  Theodore Levitt’s famous buggy whip manufacturers.

The good news is that it is possible to identify and plan a course of action in the face of disruption. The bad? Well sometimes the disruption is so genuinely and forever disrupting  that no matter what action is taken the product or service is no longer relevant. So how do product managers and product marketers answer the age old question of ‘how do we react and handle disruption?’ Obviously reading Levitt’s thoughts is a good place to start, but these six steps may provide some guidance.

1. Forecast possible disruptions: Always difficult to determine how much effort to invest in doing this.  After all focus is a critical element of business success. But, especially in technology, there must be time and attention given to evaluating possible scenarios that can potentially impact your business. Forecasting these possibilities means extending your network well beyond your immediate business ecosystem. Understand the possible tangential maturation of elements that impact how benefit is delivered to your customers.  For example, during the movement away from vinyl and analog to digital and compact discs perhaps it would have behooved record executives to gain at least a cursory understanding of just how this new technology worked, and where it might lead.  Certainly it is difficult to argue that the transition that started in the mid to late eighties could have easily been extrapolated out to ultimately digital distribution via file transfer, but the exercise in understanding the new medium may have raised flags as technology quickly evolved.   The point is increase knowledge by gaining different perspectives and be on the  look out for possible application.
2. Identify the impact of disruption: With these evolutionary possibilities defined it makes sense to assess the impact to the current business model. How do revenue streams become affected? How does the behavior or expectations of the marketplace change? An imperfect science to be sure, but one that is essential to be able to identify when disruption is solidifying and give the organization a head start in being able to effectively address it.  Consider Netflix current position against the likes of HBO and Showtime.  The Netflix streaming service began as early as January 2007, yet it seems that only in the last year have that the premium pay cables services are becoming concerned.  Surely it could not have been too much of a stretch to extrapolate out what at the time was simply an add on service targeted squarely at viewing content via a laptop or PC and not yet a potential alternative digital video distribution model usurping traditional channels.
3. Know the business at hand: Levitt’s paper goes to great lengths to underscore the importance of knowing  the business you are in. The famous ‘buggy whip’, for instance, was not a whip but a method of starting transportation. It is an ideological element of marketing in general. What is it that you are selling? The whip or moving from point a to point b? It is important to understand the business from the ultimate value or benefit delivered to the consumer and helps with step number 6 below.
4. Define requirements: With the market need defined (the business you are in), how does the disruption impact how a solution is delivered? What are the expectations and requirements? Can they be solved with the organization’s current approach or does adopting the disruptive nature of the maturing technology or model need to be embraced to satisfy the requirement?
5. Prioritize actions: With requirements defined prioritization becomes essential. In Levitt’s buggy whip example, moving away from the riding crop to some automotive part that ignited the combustion engine may have been the logical course of action. But given the capabilities of the current model was it a possible transition? The right course of action would have been determined by the answer to that question.
6. Be morbidly realistic: If the disruption is so game changing, and course correction so costly to an organization, it very well may be necessary to come to terms with the fact that there is likelihood that adoption is impossible. It simply happens. Levitt’s buggy whip manufactures would have had to invest quite a bit of capital to become an automotive parts manufacturer, all the while sustaining the current business.  Success was probably  unlikely. The sooner an organization identifies this reality the sooner they can structure the organization to efficiently manage the pace of the disruption and investigate new revenue models that match their operational abilities more closely.

Again, the age in which we live is one of rapid and seemingly endless disruption. Product managers and product marketers must be leading their organization’s efforts in identifying and handle the impact that disruption has on the business. The temptation, especially those in technically oriented fields, is to invest a lot of energy in searching for the next disruption. Identification is important, early action is differentiating, but obsessing about disruption ultimately serves only to remove focus for driving the current model to its maximum potential.  For instance, Google seems convinced that a social component is essential to long term survival against the likes of Facebook.  While it will be interesting to watch how this belief evolves, it may be a valid question to ask whether Google’s obsession about competing with Facebook’s social web dominance will take their energy way from what they do best.

Advancement in how product managers and product marketers handle disruption requires dialog. Take a minute to share what you are doing or your organzatoin in order to mindfully ID and plan in the face of disruption.

In the meantime take a look at this. San Francisco at the turn of the 20^th century. Disruption in the transportation industry in full historical context.

photo credit: kreezzalee