FIR 102: How to Use Disruption to Grow Your Profits WITHOUT Taking YOUR LAST CENT??

Financial Investing Radio

Disruptions take many forms, some come from competitors, some come from partners, and some come from pandemics.

As a small business owner, are we creating the disruption or aligning with the noise it produces?

What can we as small business owners do with disruptions without taking our last cent?

Hey, everybody, this is Grant Larsen. Thank you for joining another episode of ClickAI Radio. All right, so today we are talking about disruption, right disruption to our business disruption to our profits. How do we use disruption to grow our profits without taking our last cent? That's a huge issue and topic today. What we really want to discuss is aligning with destruction. What does it mean to do that? We all know who Clayton Christensen is, back in the 1990s. I think it was he had coined this concept called disruptive innovation. I'm going to quote something that he said on that, alright, you're ready. It's three sentences. So buckle up. All right. So when another company comes along with a novel technology appealing to a niche market, you're not likely to respond right away to this marginal demand. He goes on to say, yet, as new technology improves, suddenly a broader swath of customers find they need it, and you don't have it. Last sentence, here we go. So you have to marshal your resources to deal with the shift in demand as quickly as possible. And quote, all right, so here's here's not. So if the disruptions coming, of course, from our competitors, often our teams, and we've all lived this, we're focused on some other projects. And we often don't have the right set of skills even to address what that disruption is. And so we've got to pivot to deal with that. This style, as we all know, is rather reactionary in behavior, right? It's quite common for us, though.

So the question is, is there another way, if we continually ask the question about emerging competitors, and preparing for continual disruption, then our business can be more nimble to address disruption, the challenges we all know is we get caught up in the daily weeds of running and executing the business and then stopping to step back and look at this actually takes a lot of time and effort, of course, now, as a small business, most of us find it really difficult to set aside some innovation team, right, that's constantly looking at disruption. You know, the big, the big organizations will often have those kinds of teams. But one approach is to continually keep a pulse on the most effective and least effective behaviors of your teams. And then being prepared to draw the least effective behaviors on a continual basis. This actually is one of the key key characteristics of AI. When you apply AI on an ongoing on an ongoing nature to your business, it actually helps you to inform, hey, this is something that is not adding to your bottom line in as effective as a manner. And so you want to leverage that right? Take advantage, stop those ineffective behaviors. This means that though, we have to continually rethink and retool, we have to be prepared to relook at our offerings and our operations, and be willing to make adjustments to those. And sometimes if we get too comfortable, that actually turns to really hurt us. But again, we're all busy on a regular basis doing this is difficult. So again, leveraging AI helps us to augment our own intelligence, freeing up our brainpower for creative thinking, I don't know about you, but I know I don't want to sit and go through endless sets of spreadsheets to try to find patterns and discover what this stuff looks like.

I mean, you can show some things through a few cool, you know, charts in Google Slides or an Excel things like that. But what it doesn't do, those are dashboards that are basically historical. The AI however, has the ability to discover the patterns that use insights that that are difficult for us for our brains to actually see. Now, some will view disruption as part of their Risk management strategy. And so it's important that we look at this, are we going to look at disruption from an innovative perspective? And we're going to take whatever the whatever the destructive disruption is, and am I going to use it to innovate forward? Or am I going to look at disruption from a perspective of let me manage the risk, it's not that one is better or one is worse, some people and some organizations are driven more by moving away from pain. And other organizations are benefited or more focused or motivated, I should say, by moving towards some goal or vision, either one, both have to respond to disruption. So not long ago, I was talking with a utilities company, and there had just been a major storm in the northwest part of the US. And they were scrambling to deal with the outages. Now, these kinds of disruptions, of course, affect our daily processes. And it may require changes to our own business processes and management structure. I was looking at a report not long ago, it came from Accenture. And the report in this article I was reviewing it's called the report was called breaking through disruption, embrace the power of the wise pivot. Now I love the way that Accenture uses the term wise pivot. Because that truly is the essence of organizations that have survived. It's their ability to to pivot. Alright, one of the things that Accenture pointed out in this is that they looked across 18 industry sectors and they surveyed, you know what those organizations or organizations in those sectors had been doing to deal with with with disruption, they looked over an eight year period of time.

What they found is that the majority of them actually left about $41 trillion in enterprise value, they left it meaning they left it exposed, they didn't go embrace it or take take advantage of opportunities. $41 trillion of money left on the table. That's massive, right? That's really massive. So this was about 63% of the companies that they looked at, faced high level of disruption during that period of time. Now those, that report was pre COVID. Right? That's huge. All right. Now, we all know that, obviously COVID hit and actually those numbers are much higher, right, in terms of the percentage of companies being impacted by disruption. COVID being one of those. So as a small business owner, what's our job? Are we in the job of creating disruption? Or are we in the job of aligning with disruption? Well, I would say it's both. But let's talk about disruption right now, in the sense that we align our businesses with it to ride the tide. Okay, that's often much easier for us to do as small business owners. Now, I ran into a framework that some organizations have put together around parameters to evaluate a disruptions potential impact to your business, I kind of like what they did here. They broke it into three areas. There's evaluating it from an industry perspective, looking at the impact to competitors, and your protection from competitors. And what would happen to you if your competitor won? So that's the first category, the other category?

The second category was internal, which is, what's the impact to your current business? And what level of internal challenges are you having? And then the third category was focusing on your customers, right? How do your customers feel about this disruption? Is it impacting them? Is it is it just a novelty to them? What is that? So what I did was I took this framework, and I filled it in with an example of blockbuster and Netflix, right? Who doesn't know this one? Right. Let's, let's try this one out. Okay. So from an industry perspective, so we've got blockbuster, obviously Netflix comes in. And and at the time, how is blockbuster responding to this? Well, you know, when it first started to happen, actually, as Clayton Christensen pointed out, look, okay, Netflix comes along, and yeah, they have this shipping DVD thing, right? And okay, they're starting to stream a little bit, but you know what, they just think that their customers think this thing's a novelty, it's going to go away. There are some internal debates, obviously in blockbuster, right. They're looking at this saying, you know, what, we're unwilling to pivot were unwilling to make changes to this. And at the time, the industry's impact, at least some sure from their perspective, I wasn't there in their board. rooms for sure.

But from the external behavior looks like that they didn't view that it was a winner take all scenario, right? And so this competition from them certainly didn't see or from, from Netflix didn't seem that much of a threat. All right, hindsight 2020. Obviously, what we do see is how did Disney and Amazon and Hulu and so forth, how did they respond to disruptive streaming? Well, we all know that they aligned and leverage did is we all have multiple accounts today, right across these different streaming platforms. So I refer back to Clayton Christensen, right, when another company comes along with a novel technology, and you're not likely to respond right away. Because you know what, it just doesn't seem like that big of a deal. There's some point though, where it crosses this threshold where suddenly your even your customers are starting to ask about it. And he can't ignore it, right? And even organizations like Disney, and Amazon and Hulu line up with this, right? So let's try another example. Let's say instead of talking about blockbuster, let's talk about you. And instead of talking about Netflix, let's talk about the disruption of COVID. Alright, so you with the disruption of COVID on your business. So if we look at the three areas, all right, what's the impact here of COVID? To your industry, and to the competitors, your competitors in your industry? Right? What is the impact to them? What's the internal impact to your business? And what's happening? Is there some internal controversy? I'm sure there is? And what's the impact to the resources of your organization?

And then the third category is how, how are your customers being impacted by this? Is this a novelty? Are their own processes being disruptive? The question is, how will you pivot and align? Now? What does this have to do with AI? Right? Well, quite a bit, I would argue the key message here is about pivoting your business. And as a small business owner, you actually can't afford to pivot with blinders on using AI to analyze and expose your sales behaviors, you know, discovering, not just sales, but business behaviors, and so forth. discovering what you don't know you don't know that, that actually becomes even more critical now than ever. And then as you discover what you don't know you don't know and AI exposes those things. You need to be able to prevent, you know, pivot pivot your business. Now to learn more about how to pivot with the current disruption. We're going to be launching a webinar soon, so keep an eye out for information on this. You can get started though by going to click ai radio.com. Alright, everybody. Thank you for joining and until next time, prepare to pivot your business in the current disruption.

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