Disruption is the New Normal
Disruption. One of the buzz words lately over-used and misunderstood. The standard business definition is “radical change to an existing industry or market due to technological innovation.”
I would argue is not always technological. And is that radical change good or bad? Is disruption good or bad?
The fact of the matter is, DISRUPTION IS THE NEW NORMAL.
Whether we like it or not, as business owners, as consumers, as social citizens, we better embrace it. It is the new norm and will only continually cycle and accelerate.
If it is self-disruption, or at least a state of managed or accepted disruption, it can benefit our enterprise.
This agility and flexibility to take on disruption and capitalize through it and because of it, should even be a capability or culture that is driven in an organization. It will change the way customers expect products/services and experiences, it will change the way workers produce, and it will change the way we must manage our business models.
In automotive, we could highlight a lot of major and recent disruptions. There is the pandemic effect amplified by home delivery and mobile service. There is the new mobility ecosystem accelerating around access to transportation on-demand. There is the new wave of EVs coming on due to many factors including gas and oil prices and a drive to a sustainable economy. Many technologies are disruptive to our previous industry and business models such as Cloud computing, Artificial Intelligence, Augmented and Virtual Reality, 5G and more. These technologies enable new experiences, real-time information, constant connectivity, and an overall overhaul of traditional, sequential, and transactional engagements.
The customer experience with a brand is now always on, anywhere, anytime, and anyhow they choose.
An illustrative landscape of some of the disruptive forces, effects and outcomes is pictured below.
In the automotive retailer world, what have we seen in terms of disruption, again not just technological impacts but all kinds of disruptions or “disturbances”.
There are quite a few, including but not limited to:
- Supply chain issues and inventory shortages
- Even more demanding customer expectations
- New EV models and companies with direct-to-consumer models
- Ever increasing technology in vehicles including over-the-air updates
- Uncertain future of the “as is “dealer profit model
- Ability to work with customers in a multi-channel format
- Some brands and vehicles getting more flexible financial access and even subscription models
…and much more.
The real question is, what do we do about it? How do we handle these disruptions? How do we survive and capitalize on disruption and build our business into future-proof models?
The hard part, even though I asked the questions, is that there is no easy answer. There is no one solution, one technology, or even one way to ensure that your business can survive and thrive in the future.
I have heard before, “we cannot predict the future, but we must plan for multiple futures.” Good advice.
Meaning nobody knows what exactly the world, our industry or our business may look like in 5 years, 10 years and certainly not beyond. Anybody see the supply chain shortage coming 3 years ago? Anybody think Tesla would be on of the Top 10 market cap companies 10 years ago?
52% of the Fortune 500 companies from 2000 are extinct. That is not a typo. Read that again.
So, there is no 100% prediction, and there is no one easy answer. But the recipe for success in an ongoing continuous cycle through any disruption must include some basic core operating principles and capabilities.
Some critical components and general principles include:
- Do not have a rigid business model, be willing to change
- Build a business model enabled by flexible business processes and enabling technologies aimed at delivering experiences and fulfilling needs (not transactional simple mundane tasks)
- Equip your people with training, knowledge, culture, and power to deliver customer experience (no barriers)
- Data and Insight. Understand what shifts and movements there are in your customers and your business.
- You may think you are in the car business, but you are I the customer experience business.
- Focus on needs management over leads management.
- Take Action. Early, often and always. Do not wait for change to come to you, change what needs to be ahead of the curve.
- Consider your business as a platform (not a static and rigid set of transactional processes), with dynamic capabilities that can flex and pivot to meet demands and needs.
These may sound high-level and unachievable for a dealership. But they are not, and they can’t be. They must be driven into the culture of your business.
In more tactical terms, your business must consider, deal with and optimize the ability to:
- Sell and service different (online, offline, omni-channel, mobile, and anyway the customer wants it.)
- Assess and determine new business models that can be viable for your customers and market:
- Subscription models
- Rental / car sharing models
- Other access and financial models to enable customers to access mobility
- Charging stations
- The dealership as an experience center not as an inventory hub or “sales office”
- EV versus ICE customers service and overall needs
- More personalized build-to-order to overcome shortages
- Service as a service (more of a Geek Squad model) than a service bay model
- Be flexible to accommodate all different kinds of customers and their needs
A tall order indeed. But if we think of and build our dealership business model more as a dynamic platform of capabilities and assets to accomplish the above and more, we can succeed in multiple paths of revenue streams.
It is not easy to accept that our business must be under a constant state of transformation.
But in order to continually survive, thrive and innovate we must always be in that continuous state of transformation. Be comfortable with being uncomfortable. Because one thing is certain, the future is exactly what we think it will be.
The key take-away again, DISRUPTION IS THE NEW NORMAL.
Get used to it and realize we have to deal with it continuously and forever. Capitalize on the fact that if done right, we can enable our business to dynamically flex in new directions and new models to support and thrive in multiple paths. Put focus and effort on the notion that are business is a platform of capabilities, not a rigid set of workflows.
With the focus on the North Star of customer experience driving your business, the capabilities can be dynamically developed to withstand all change and disruption.
Dennis is the Head of Automotive Industry, Innovation & Transformation at Capgemini Invent. An innovative strategist and transformer, Dennis’ experience includes driving brand and customer strategy into market and profit realization.
Dennis is a change artist who creates tangible business value through ideation and visioning, creative marketing strategies and process implementations, strategic business transformation and customer understanding and delivery.View full profile