That is digital disruption. And to dive deeper, it is happening at the market level, the product level and the channel level.
Market disruption is the idea that disruption takes place by connecting buyers in a marketplace through supply and demand matching, this is what we call Uberization.
Product disruption is the transformation of a product either by converting it into a service or by attaching software-based intelligence to the product, this is what we call Servicization.
Channel disruption is the restructuring of the channel and the intermediaries in the channel by taking advantage of networks, this is what we call Amazonization.
Uberization takes an asset that is poorly utilised and matches demand and supply. There are two types of marketplaces - asset marketplace and labour marketplace. Uber is a combination of both whereas Airbnb is an example of an asset marketplace.
The important implication of an asset marketplace is that latent capacity is being brought online. We didn't take cab drivers and convert them into Uber drivers and we didn't take hotels and convert them into Airbnb locations - we brought new players in.
So, are you at risk?
- Do you sell a service that relies on high-value assets or high-value human capital?
- If you sell capital goods, are your assets utilised at less than 20 per cent of their capacity?
- Do customers use your products or services only occasionally?
- Is there latent capacity in your market that can be brought online?
Professor Mohan Sawhney of the Kellogg School of Management delivering the opening keynote address of EDGE 2017.
Servicization is the simple idea of replacing ownership with access and making a product into a service. But there are two types of servicization, one where a product becomes a service which is SaaS, IaaS or PaaS, or when a product becomes intelligent by the addition of software that allows you to create subscription-based models through the intelligent use of assets.
And to find an example of this, take unmanned aerial vehicles as a use case. We are all familiar with drones in the consumer sense, but what about a military drone made for the US Army?
This drone carries out surveillance of targets over countries such as Iraq or Afghanistan and do you know how they get paid? They get paid based on pixels over target. They get paid by the imagery that is provided and by the pixel - it's an as-a-service model.
So, are you at risk?
- Can your products be infused with software-based intelligence?
- Can your products be connected to and accessed over a network?
- Do customers value usage-based pricing models instead of paying for capital assets?
- Can you get paid for the value you create for customers?
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