Insights

To Fight Disruption, Focus on Demand

It’s Not the Technology, It’s Customer Behavior

The cycle of disruption for incumbents is quickening. As software becomes a more integral part of every industry, the analog of the high-tech and internet sector is increasingly relevant. And that means incumbents can learn lessons from how tech firms have been handling disruption for decades. 

The ‘name of the game’ in high tech has been category domination, first by defining and leading new categories—PCs, networking software, enterprise resource management (ERP) software, internet publishing, and the list goes on. Firms jumped in with venture financing with the ambition to define a category in their own image, with outside investor returns and shareholder value growth. 

More recently, the phenomenon has been about category upheaval, disruption, and redefinition. Over the course of a decade, for example, Apple has redefined the category of personal appliances, with the iPhone, iPod, and iPad. Tablets and smartphones have eclipsed desktop PCs; software-defined networks are replacing networking hardware; marketing automation and adtech software has redefined advertising; and so on. 

During both category creation and category upheaval, growth was driven by the supply side. Keeping pace with technological advances, companies produced better, faster, and cheaper products, and occasionally, ones that were “insanely great!” as Steve Jobs would describe them. As customers adopted these better, faster, cheaper products, they became more and more sophisticated consumers. Today, their behavior and demand—what they do, where and when, their needs and goals—shapes the type of products and services that are growing in relevance and value. The 'name of the game' is now about generating ‘pull’ from consumers for new offerings, as compared to traditional product ‘push’. 

Tech firms are now focused not just on breakthrough technology, but on how people engage, unmet goals, and needs they have as they live their lives. Products like Slack are responding to millennials who consider email as ‘so yesterday’. The availability and expectation of real-time messaging – SMS and the like – has driven a behavioral shift, which changes customer expectations and drives a category shift from (asynchronous) email to messaging.

Thinking about the needs and goals of customers is a good way for incumbent organizations to react to disruption. Incumbents need to think about customer journeys, their goals and needs, and work back from that to create offerings that meet demand.


Read the 2017 State of the Financial Services Industry Report for a detailed look at the archetype options for Financial Services incumbents to capture sustainable competitive advantages.


You may not always know the course and speed of change, but if you understand the trajectory of change and demand, you can experiment and place small bets along the way. Behind the idea of placing bets is the notion of “optionality.” You don’t know the future, but acting your way to the future, guided by likely trajectories and with serious conviction and determination, is vastly better than watching from the sidelines. 

In financial services, for example, people expect to be ‘met’ where they are and with coherent experiences across their day-to-day journeys – at home, at work, and on-the-go.  Working back from needs to experiences and offerings is one important step toward future-proofing your business.  An equally important step: breaking down the journey toward new customer value into shorter legs that receive stepwise investment, so that you can build confidence, management conviction, and adapt to learnings and market developments along the way.