As just about every current business book will tell you, the pace of change in today’s business environment is greater than it has ever been. However, this ever-increasing rate of change isn’t unique to the early 21st century. It’s been occurring for several decades. What is unique today is the nature of change – not just the speed of change but also how broadly and deeply change can impact your business.
So, the danger for today’s businesses is that it’s ever-more likely that the pace of change will create a tipping point. A point where, once you’ve fallen behind, it is no longer possible to catch up. That crucial point where if you miss the wave, you can’t paddle fast enough to hop back on.
In the last episode of my Projectify Points vlog, I talked about how change is your most formidable competitor. In this post, I want talk about how the nature of change has shifted to give it a ‘competitive edge’.
How quickly does change enter your market or business?
Our traditional protection against the tipping point.
In his book The Tipping Point, Malcolm Gladwell discusses the idea that a great many phenomena – disease, ideas, commercial products – can suddenly go from steady but unremarkable growth to exponential growth under the influence of a particular catalyst. Gladwell builds on Everett Rogers’ Diffusion of Innovations theory to describe how these phenomena reach a certain point where they ‘tip’. He explains that the right sort of catalysing influence – most often a communicative catalyst – can cause an innovation or idea to spread very rapidly from the part of a population known as the Early Adopters across the Early Majority.
These Early Adopters are the visionaries who are willing to take risks in order to drive revolutionary change: in business, these have traditionally been smaller companies. By contrast, the Early Majority are careful pragmatists looking to minimise risk but still in search of incremental, evolutionary change: in business, these have characteristically tended to be larger organisations. These fundamental differences mean that Early Adopters and the Early Majority don’t talk to each other – visionaries want to share their excitement with other visionaries and pragmatists want to evaluate the experiences of other pragmatists.
Geoffrey Moore describes this communication barrier as ‘the chasm’. In his book Crossing the Chasm, Moore writes about the need for high-tech entrepreneurs to be intentional about bridging the chasm if they want to be successful in selling their products to pragmatic, mainstream customers – the Early Majority.
For a long time, this chasm has also provided a benefit for medium to large organisations – it created a natural buffer to disruptive influences. They could rest secure in the knowledge that their competition and the market more generally sat firmly in the pragmatic, Early (to Late) Majority camp. There was a very limited communication link with the Early Adopters and, as a result, a relatively slow diffusion of new influences made it across the chasm. Importantly, the diffusion across the Early Majority – their competitors – tended to be relatively slow and undertaken in a cautious manner as enough evidence was gathered to get this group talking about it with their fellow pragmatists.
However, this is no longer the case.
The chasm is closing.
The communication chasm between the Early Adopters and the Early Majority – between the visionaries and the pragmatists – is being bridged.
Greater access to capital means that Early Adopters are no longer the small gun-slinging start-ups of an earlier era. More frequently, Innovators are being brought into the mainstream by larger organisations or more influential customer groups that have joined the ranks of the Early Adopters because they are willing to invest in the visionary thinking that allows them to disrupt existing markets.
Development of agile project approaches means that innovations and new ideas can be developed and scaled much more quickly and at lower risk than ever before. This enables the pragmatic Early Majority to have their cake and eat it too. They can be quicker to adopt without the risk profile of a visionary. As a result, the true Early Majority is more tapped into the Innovators and the Early Adopters – closing the chasm with much more open communication.
The catalysts for tipping change into disruption are greater than they’ve ever been.
Today’s rapid flow of information means that your customers (and consumers more broadly) are more educated about those innovations finding a beachhead with the Early Adopters. They’re much more likely to follow their experiences and be bullish about the relative risk and reward of moving with them. More than ever, customers don’t wait for their existing suppliers to develop new ideas and technologies – they’ll seek out the companies that give them early access or are leading an emerging trend. This makes ideas and innovations diffuse much quicker – transforming them into majority expectations seemingly overnight. As new competitors go from asking customers what they want to completely re-defining it, adding a new feature to what you already make is an inadequate competitive response.
Most importantly, many of the changes and shifts diffusing through the business environment are no longer confined to a unique technology, a single remote corner of your operation or a specific segment of your customer base. The intertwining of new innovation with traditional systems and practices can mean change impacts your entire business ecosystem.
How does this effect the way you think about adapting to change?
It is no longer safe for businesses to nurture the chasm of communication between themselves and the visionaries. You can’t wait to explore a market trend or respond to a competitive influence only after your fellow pragmatists demonstrate that it is a safe path to follow. Today, it is far more likely that once you see that a business shift is ‘safe’ for the majority, it has already reached a tipping point. And once it has tipped, organisations can very quickly find themselves in the Late Majority or, worse yet, the Laggards scrambling to repair the damage and trying to keep up with the shift.
You need to stay abreast of trends in the market and shifts in customer expectations. You need to actively assess the impacts of these emerging changes for potential threats or the crack of an opportunity. You need to be intentional about determining whether this knowledge warrants strategic action or experimentation.
What innovations are just cresting the horizon that could fundamentally change the way your customers solve their problems? What technological and socio-economic trends could shift the way you need to conduct business if you’re going to keep up? How much do you know about them and how long do you have before the future is now? I’d love to hear your thoughts in the comments below.