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Executive Service Roundtable:

Digital Market Disruption in Services

How to recognise and anticipate potential market disruption 

Join our Next Executive Service Roundtable about "Shifting to a Product-as-a-Service Business Model"

A few notes from the discussion sessions

 

Predictability

It is hard to predict the future, and whether market disruption will happen or not. You would need a crystal ball for that.

Signs are hard to recognize in the early phases of an exponential growth trajectory.

Hence, the challenge is not to be accurate in predicting what will happen and what will not happen. The challenge is more to develop scenarios for the future, assess the impact of such scenarios, and define a strategy for navigating a potential trend.

 

Low-cost disruption

As most market disruptions happen at the lower end of the market, the question is: What exactly is the “lower end” of a market? Is this price only?

In essence, it is all about “easier access” to using a product or service. For example, by reducing the:

  • Cost to operate or to use.
  • Total cost of ownership (maintenance cost, energy consumption).
  • Level of skills required to operate or use.

 

Closing eyes for potential disruption

Still, knowing how other companies have been disrupted in the past, there are visible signs for a potential disruption. Still, it appears to be hard for companies and people to respond. Often, the best initiatives to navigate disruption have high risks of cannibalising current business and may lead to decreasing need of certain job profiles.

As a result, businesses have many objections to pursue these initiatives.

The argument, that these 3rd party service providers and maintenance departments do not have the technical expertise and propriety knowledge could be a risky argument. After all, all companies that have disappeared from disruption had similar arguments, which only held true during the early phases of disruption.

 

Convincing customers

In the early stages of a new development, it is hard to convince customers of a new solution or service. This is a common pattern with:

  • Every new product which is still at the beginning of its product-life-cycle. Suppliers need to find the first movers, then the early adopters and onwards.
  • New products or services that are about to disrupt a market. First movers are at the lower end of the service, so they are not necessarily the current mainstream customers.

A new, emerging solution with relatively low maturity and value may have its first success in emerging markets (countries) if "moderate" is good enough and more accessible (lower cost) is a priority.

 

Scenarios of disruption of (field) service business:
  • Additive Manufacturing (3D printing) could be a severe disruption to manufacturers that make a large portion of their revenues and profit from spare parts.
  • Drastic reduction of the need of maintenance (like for example electric vehicles).
  • More complexity and intelligence, like diagnostics, predictions, prescriptions for maintenance and repair being executed by algorithms. This would reduce the required skills for field engineers, which changes the options for (local) 3rd party service providers and maintenance departments of customers.

 

Plan to disrupt?

Most disrupters of an industry do not envision or plan to disrupt an industry. They see a big opportunity, an unmet need, or a trend, and pursue the opportunity.

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