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Archive for the ‘Transformation’ Category

Disruption in your hand

Wednesday, June 13th, 2018

You are carrying a device that has been responsible for the decimation of industries, the loss of millions of jobs and has subjected billions of people to an increased risk of fraud and bullying. This same device is also responsible for enriching our lives, bringing information and money to the billions of people living in remote and less developed regions of the world and enabling thousands of new businesses. This device is of course your Smartphone. It is a prime example of disruptive innovation.

What is disruptive innovation?

The term ‘disruptive innovation’ was coined by the academic, Clayton Christensen in 1997 to describe innovations that, at their inception, pose no threat to established businesses, due to their limited functionality. But over time, as they develop their functionality/price, they begin to nibble away at the established market, taking customers who are looking for ‘good enough’ solutions. The loss of these customers may not necessarily be seen as negative by established businesses who may well regard them as less attractive lower margin customers. But as time goes on, the disruptor takes more and more market share as its proposition grows in capability and acceptance. The result is that the incumbent, and once dominant, providers are squeezed ever more upmarket and ultimately into niche markets (see Figure 1).

Figure 1: Disruptive innovation (based on work by Clayton Christensen)

Christensen argues that disruptive innovations can hurt all companies – especially the successful, well managed companies that are responsive to their customers and open to new technologies and methods (see his book ‘The innovator’s dilemma’). For these companies tend to focus on meeting the needs of their existing customers. They ignore the market segments most susceptible to disruptive innovations, because these segments often have very tight profit margins and are too small to provide a good enough growth rate to attract established firms. The result is that these ‘less attractive’ market segments become the ‘beach heads’ for new value propositions that grow and develop in these segments before invading the ‘more attractive’ more profitable segments in the market – the ones that are the preserve of the established and dominant competitors.

The Smartphone as a disruptor

The smartphone is one of the most disruptive products to have appeared in the last two decades. It has disrupted a number of markets, including digital cameras, music and video players, portable satellite navigation, e-book readers, voice recorders, paper diaries and personal organizers and even the humble wristwatch. The subsequent growth in phone screen size is creating further disruption in the tablet and laptop markets.

The smartphone is a good illustration of the process of disruption. Consider but one of its functions, its ability to take digital photographs. The first mobile phone with a built-in camera was manufactured by Samsung and released in South Korea in June 2000. It had a 1.5-inch LCD screen, and the built-in digital camera was capable of taking only 20 photos each at 0.35-megapixels in size, but the user had to connect it to a computer to share their photos. Sharp launched an improvement on this concept in November 2000 – the J-SH04 could take photos at 0.11-megapixels, a lower resolution than the Samsung, but importantly photos could be shared using mobile data transmission. This phone therefore combined the key elements of today’s smartphone cameras – picture capture and immediate distribution.

By the end of 2004 the camera phone was riding high. It was reported that over half of the phones sold worldwide in the first 9 months of 2004 had cameras in them, and two-thirds of all the phones shipped in the third quarter were camera phones. Leading the way was Finnish manufacturer, Nokia.

The arrival of mobile phone cameras at the functional level of ‘good enough’ was illustrated in 2013 when the Chicago Sun-Times sacked its entire staff of 28 full-time photographers and replaced them with reporters using smartphones. As well as significantly reducing the newspaper’s costs, the paper was able to increase its video content. The paper released a statement saying: “The Sun-Times business is changing rapidly and our audiences are consistently seeking more video content with their news. We have made great progress in meeting this demand and are focused on bolstering our reporting capabilities with video and other multimedia elements. The Chicago Sun-Times continues to evolve with our digitally savvy customers, and as a result, we have had to restructure the way we manage multimedia, including photography, across the network.” It was reported that reporters were to be trained in ‘iPhone photography basics’.

Figure 2: Digital camera sales volumes  (Source: IC Insights)

The impact of the disruption caused by camera phones on traditional cameras was clear to see with the market leaders being squeezed into the smaller more specialist and profitable, niches such as digital SLRs.

Other victims of smartphone disruption were closer to home

Apple has benefitted from the disruptive impact of its iPhone smartphone product on the mobile phone market since it was launched in 2007. The immediate loser was Nokia which was the market leader at the time, with handsets that focused primarily on mobile telephony and secondarily on mobile computing and entertainment. But another major player, BlackBerry (originally called Research in Motion) was also hit by the move away from the traditional keyboard to touchscreens.

It is also interesting to consider why it was Apple that was the disruptor of the mobile-phone market and not IBM, whose Simon Personal Communicator introduced in 1994, was effectively the first Smartphone or Nokia, the market leader, whose Communicator series of Smartphones were successfully sold into business markets for several years before the iPhone was launched.

One key factor in Apple’s successful disruption of the mobile phone and smartphone sectors was that the company primarily targeted consumers and not businesses with its smartphone offering, unlike both IBM and Nokia. This enabled it to quickly build volume and sizeable market share. It cemented this success with its complementary ecosystem built around the iTunes App store and its partners’ offerings. This enabled it to then enter the business market taking advantage of the BYOD (‘bring your own device’) movement with its customers using their phones at work and helping to convince purchasing decision-makers of their benefits.

Dealing with disruption?

Disruptive Innovation can threaten any business. It also offers the opportunity for innovative businesses to enter new markets with the strategic potential for overcoming the existing dominant competitors. So any forward-looking organization today should have approaches and mechanisms that try and spot such potential disruptive innovations when they are still ‘over the horizon’. Indeed such disruptive innovation, used proactively, can form the core element of a powerful business transformation strategy.

Unfortunately there is no one approach that can be used to identify potential disruptions early. Businesses need to select a range of complementary approaches for ‘scanning’ the business environment for potential disruptions. They also need to develop and assess scenarios of technology, competition and market changes to determine when and how they should best respond to potential disruption. Whatever approaches they choose to adopt, it is important that they are proactive, rather than planning to react when disruptions become visible – for by then it is likely to be too late.

The one approach that business leaders should most definitely not adopt – is unfortunately the most common: to take a dominant market position for granted or to consider it has some degree of permanence. The business history books are full of companies that have made that mistake.

This article is an extract from ‘Sowing the seeds of business transformation’ by Alastair Ross,available as paperback or e-book on Amazon. It was originally published on LinkedIn on 13-6-18.

 

Why great products are not enough – the story of Nokia

Thursday, January 4th, 2018

The second video in our series ‘Why great products are not enough’ covers Nokia and its fall from market dominance in mobile phones in 2005 to market exit less than 10 years later. There are key lessons to be learned from Nokia’s experience. In this video Alastair Ross reviews Nokia’s fall and analyses why and how it happened and the key weaknesses in Nokia’s business model and capabilities.

 

How healthy are your legal services?

Monday, November 20th, 2017

Business challenges are driving services thinking in law firms

Today law firms must compete on the basis of their legal services – not just their lawyers.  Clients buy legal services to get problems solved and these services are typically delivered by lawyers – but with increasing competition, the impact of IT and the internet and deregulation in some markets, this is changing. With the aim of meeting client demands of ‘more for less’ and doing so profitably, progressive firms are giving increased focus to improving the value of their services and the efficiency with which they are delivered.

The legal service paradigm has changed

Twenty years ago ‘legal services’ were simply the aggregate outcome of the work of a number of lawyers with a specific set of skills. The way the work was performed and delivered varied by office, by partner, by fee earner and over time. There was little consistency in how the service was performed or delivered.

The legal world is very different today. To find out more and how you can assess and improve your legal services read our new whitepaper: How healthy are your legal services?

If you would like to know more about Codexx experience or services in this area, please contact us.

 

 

Transformation in a mid-sized law firm – Whitepaper

Monday, September 11th, 2017

Major law firms are operating in a time of great change with significant pressures on their core business model, driven by a ‘perfect storm’ of factors:

  • Digitisation of legal service delivery, using the internet & mobile
  • More sophisticated and price-focused clients demanding ‘more for less’
  • Continuing austerity – impacting public and private sector legal budgets
  • Deregulation to enable new entrants and new business models

The UK legal press primarily gives coverage to the large law firms – particularly the so-called ‘magic’ and ‘silver circle’ firms licensed in England and Wales – and how they are responding to market, regulatory and technology challenges.

But how are mid-sized regional firms dealing with these challenges? These firms are typically competing for work where rates and indeed margins are significantly lower than for the large firms competing for M&A and complex litigation work – and these are being further squeezed in this challenging environment.

To better understand the challenges and effective approaches for making major transformation in such a mid-sized law firm we returned to one of our legal clients with whom we worked in 2011-12 on a Lean programme. At that stage, ASB Law, a progressive south coast firm, was just starting out on a programme of major transformation. We interviewed Andrew Clinton, who has been the Managing Partner of the firm since 2006. He has been championing and leading the firm’s programme of transformation.

Andrew was open and frank about the firm’s approach to transformation, its challenges on this journey and its achievements so far. He agreed to the documentation of this interview in a Codexx whitepaper and sharing it in the public domain. We have done so and also added a commentary based on our re-engineering and innovation experience with multiple firms in the legal sector since 2005.

This paper provides a practical and detailed review on the approaches, challenges and lessons learned in making and sustaining major transformation in a mid-sized law firm. We have also included a framework for the effective design and management of transformation programmes. To read the paper click on the link below.

Driving transformation in a mid-sized law firm – ASB Law Case Study – September 2017

Energizing Change

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