Disruption Insurance: Protecting Your Company’s Future
Why do household names like Hertz, Brooks Brothers, Blockbuster, Sears or Gold's Gym go bankrupt, while less resourced companies in the same space thrive? The question becomes more and more urgent as we see how fast and how often incumbents are displaced by up-and-coming competitors.
Are these fates inevitable? Some industry leaders, tied to outdated business models, squeeze out incremental gains to appease Wall Street every quarter only to lose relevance with customers every year. While other, more future-forward entrepreneurs discover emerging customer needs, re-imagine solutions, and seize market opportunities with speed and agility.
What differentiates these 2 types of organizations? How can your company continue to deliver results today, while planting the seeds for growth tomorrow? We believe that disruption insurance is the answer.
What is Disruption Insurance?
Traditional insurance provides protection against a predictable event that arises unexpectedly. Disruption insurance provides protection and mitigates the risk associated with disruptive business models transforming your industry.
Hasn’t disruption become a “predictable event that arises unexpectedly” for most businesses today? No one could have predicted the pandemic, but those companies that were already preparing for change not only went on to survive the pandemic, but in many cases gained market share from their competitors.
Let’s look at 3 ways industry leaders can exercise disruption insurance to protect their future.
1. Lean Into Change:
No one likes it, but change is coming regardless of our preferences.
Embrace the reality that what got you here, isn’t going to get you there. Lean into the disruptive and emerging trends within your core industry. Explore the innovations on the periphery of your core business and be cautious to dismiss their ideas as insignificant...even Phil Knight started out selling shoes from the trunk of his car.
Also be sure to explore adjacent markets for new ideas. The biggest disruptions often develop in other verticals, then apply themselves once fully formed to your line of work. The key here is to learn about and begin to engage with nascent startups and flip the cognitive switch that tomorrow’s breakthroughs likely will happen outside of your four walls.
2. Collaborate With Disruptors:
As the pace of change continues to accelerate, emerging threats and opportunities rise with tremendous speed. You would be surprised how quickly a startup can become enterprise-ready and deliver tangible value to your business. You are best positioned to win, if you identify and partner with potential disruptors early and often. AB InBev’s Beer Garage and Comcast’s LIFT Labs are two programs that seek out innovative solutions to the immediate challenges of various business units by collaborating with startups.
You have an opportunity to turn future disruptions, into today’s solutions. This opportunity enables you to try emerging products, services and technologies with minimal risk to your core business; and it separates you from your competitors who are most probably applying a wait-and-see approach.
3. Be Early To The Dance:
A common outcome in today’s world of ‘disrupt or be disrupted’ is that an incumbent is forced to pay an exorbitant sum to acquire an established disruptor, to protect its ‘kingdom.’ Examples include Microsoft buying LinkedIn, Unilever buying Dollar Shave and Target buying Shipt. In these cases, the acquisition may be cheaper than the inevitable catastrophic bankruptcy, but significantly more expensive than if the incumbents had invested early in the growth of these disruptors.
For example, the Alexa Fund provides up to $200 million in venture capital funding to fuel voice technology innovation. Netflix open-sources algorithms to increase show recommendations. If Gold’s Gym had run an accelerator, they might have anticipated the in-home workout trend and leveraged their core competencies to create Peloton before Peloton existed?
See also Comcast Ventures, SalesForce Ventures, and Google Ventures. These are organizations are running accelerators, product innovation competitions and spinning up corporate venture capitalist teams as they realize that early startup collaboration – something we call External Innovation - insures their future.
Much like individuals wondering aloud if health insurance is a necessary expense when they are young and healthy, successful industry leaders often believe that disruption insurance is not for them. But unforeseen things happen to healthy companies just like they do to healthy people. Simple, low-cost investments in disruption insurance today, can strengthen these same companies to manage the unforeseen events of tomorrow.
VentureFuel helps established industry-leading companies identify and partner with emerging enterprise-ready startups today. From Rapid Research to Commercial Pilots and Customized Corporate Accelerators, we are here to help you insure yourself against disruption by creating what’s next now and in doing so, open up new revenue streams that represent the next generation of growth and beyond.
VentureFuel helps established companies discover and implement new technologies that drive measurable growth.