Can disruption and innovation go hand-in-hand? I often wonder about this, as I hear the word ‘disruption’ quite often. Over time, I have come to understand that disruptive innovation is characterized by two attributes. One, the new innovation is a new way of doing business within an established industry. Two, this new way of doing business is in direct conflict with traditional methods.
It is perhaps safe to say that disruption in all traditional industries in general is not just inevitable and something to be dealt with, but even desirable. Disruptive innovation using technology has the ability to transform, be it through increased transaction security, increased accountability at each step of the way or otherwise. Thus, businesses will find that using innovation, they can reduce the cost of doing business, do it more efficiently and build a more sustainable solution that doesn’t bleed money and also provides long-term results.
Are you ready? This is what disruption in procurement, for example, looks like, and it only skims the surface as most of these advancements already exist in the market.
Spend Analytics: Can you use AI to classify spend data? Products like Spend360 allows you to pinpoint every single spend on suppliers, understand why one method costs more than another and allocate spending so as to make most business sense.
Risk Management: By analyzing data from a company’s own portfolio of suppliers, as well as historical data from the industry, some products can predict the type and level of risk in procurement at each stage of product development. Such a solution can enable you to attach a premium to the risk, or to find ways to remove the risk from the system entirely.
Supply Intelligence: Churning data from millions of market sources enables products to accurately predict the price of most common supply commodities, including metals.
If this is already happening, you’d want to know what can be expected. Outrageous as the ideas themselves may be, no one ever thought blockchain could find such widespread acceptance. We can expect data to help us attach value to each sourcing operation, down to the molecular level. This can save businesses huge amounts of capital. IoT will also have a role to play in offering granular visibility across the procurement and manufacturing process by accounting for every single component digitally.
Is your business disruption-ready? Here’s how to find out.
- Do you accept that the face of the industry is about to change and that change is already underway? Every leader must look as far as ten years ahead into the future and be able to anticipate the realities of that time. Only then will the business have enough time to accept or challenge the disruption in their domain.
- Do you have a personal impact matrix? Such analysis can help identify one or two key disruptors that would impact the business most severely. These aspects can then serve as the starting point for internal review and innovation.
- Does your value proposition hold value down the line? Remember, disruption can make people go out of business overnight. With the advent of retail management systems and e-commerce, we are already seeing a reduction in the need for manpower. Evaluate your value proposition across a broad time period.
- Can you disrupt the industry? If you have a revolutionary idea, it is best that you put it into practice first. This can give you an edge in the current market and put you first in the race in the future as well.
- Are your departments integrated? Business intelligence is sourced from every single department in the business. While most manufacturers look at investment vs. output, it is time to measure the output against marketing spend, Supply Chain delays, product satisfaction and other KPIs independently and also as a consolidated result.
- Are you willing to step out of your comfort zone? Some procurement companies find that they need to step into other industries, including but not limited to information technology and software development, in order to be able to cause a disruption or survive it. Business leaders with a pan-industry perspective are more likely to succeed in this endeavor.
Research shows that in as less time as the next three years, traditional industry practices need to find a way to become complementary to disruptive innovation. Innovation would become the new norm around which traditional models work.
About the author: Irfan Khan, the innovation-driven President and CEO of Bristlecone (a subsidiary of the $19B Mahindra Group). He’s a revered marketplace change agent known for building customer centric organizations, driving business transformation and leading and managing turnaround growth strategies in business-to-business environments. As a senior-level thought leader, Khan’s uniquely combined background in business leadership, strategic planning, field execution, people leadership, and customer-facing operations has allowed him to repeatedly transform, grow and optimize organizations—whether driving turnaround, building new lines of business, or creating foothold in new markets.