As we enter a new decade, we likewise enter a period where the rate of change will undoubtedly accelerate. This rate of change means that disruptive innovation will surely impact businesses and their supply chains. So, what exactly is disruptive innovation and how can supply chain leaders plan for it?
If you look up “disruptive innovation” on Merriam-Webster, you won’t find it. However, if you look up the phrase on Wikipedia, it is defined as “an innovation that creates a new market by providing a different set of values, which ultimately (and unexpectedly) overtakes an existing market (e.g., the lower-priced, affordable Ford Model T, which displaced horse-drawn carriages).” If a disruptive innovation means your business market and operating model will be altered, then your supply chain model will be altered as well. The goal is to better anticipate and plan for those changes, but how?
Below I share three tools for identifying and planning for such disruptive innovation. I’ve crafted them using a fishing analogy to keep it a bit more memorable.
1. Fish Deep
Identify disruptive innovation by monitoring early adopters. This segment has a deep knowledge of products, services, and technologies and can often explain them better than your sales reps. You can monitor early adopters through many different methods, such as subscribing to early adopter survey panels, holding focus groups, or visiting online expert forums. The key is to look at their behaviors, opinions, and questions. What solutions do they want that do not yet exist? What companies are they praising? What technology, products, or services are they adopting (or dropping) and why? Their actions are the tip of the iceberg on what could be a disruptive innovation in your market.
2. Fish Wide
Cast a wide net of feedback resources who are externally, not internally, focused. For example, cashiers who are closest to the end consumer, your suppliers’ national account representatives who interact with multiple other customers, your B2B customers, or even your internal sales or business development teams. Set up an ongoing flow of information on what is happening in the market using these feedback resources as your external lens. Instead of having cashiers ask “Did you find everything you wanted today?” script open-ended questions like “How could we have improved your experience today?” and then reward them for insights and ideas. Ask your business customers what significant [product, technology, service, process, organizational, fill in the blank] changes their other suppliers or customers are making. Those significant changes could just be a disruptive innovation on the horizon.
3. Use a Fishbone
Create a fishbone diagram covering your core supply chain processes. A fishbone diagram—often called a cause-and-effect or Ishikawa diagram—is a visual tool that is most commonly used as part of quality management efforts to find the cause of a problem. However, the tool can also provide a nice roadmap for thinking through how potential disruptive innovations may impact your supply chain. Let’s look at how.
Based on your “fish wide” and “fish deep” exercises, identify what some of the more likely disruptive innovation scenarios are. Put a potential impact at the head of the fish and work backwards with the bones outlining your supply chain processes and various offshoots. For example, consider visual-recognition technology replacing scanning. How might your business and corresponding supply chain be impacted? How might the visual-recognition technology change inventory management procedures, the configuration of your warehouse receiving space, or your current warehouse loss-prevention measures and equipment? How might data collection and data management change? You can identify multiple innovative disruption scenarios and run them through related supply chain processes such as logistics, receiving, warehousing, purchasing, employee readiness, contracting, and planning. The exercise can be driven by your supply chain, but should include input from other functions.
Ultimately, the end result of this fishing expedition is not an end at all, but an ongoing process—and that process likely will not produce a definitive answer on the next disruptive innovation and its impact. With that said, there is a significant benefit to identifying, modeling, and discussing these potential disruptive innovation scenarios. For just like a well-thought rhetorical question, the value lies in the conversations and insights that follow.