Market Disruption and How to Confront It

Posted on May 21, 2015 in Entrepreneur, Setting up a Small Business, Small Business, Small Business Tips and Tricks Series, Tips for Entrepreneurs | Comments Off on Market Disruption and How to Confront It

Market Disruption and How to Confront It


So you’ve owned your business for five, ten maybe twenty years and things are going along just fine. Then suddenly a new way of doing things comes along. The internet, mobile devices, a new type of forklift that’s ten times lighter, but just as strong as yours—whatever it may be—and now things have changed. People don’t want to come to your office for an initial consultation, they want to pick you from your website, and now they want the work done twice as fast for the same cost. Welcome to the world of disruptive technologies—new developments that have the power to change the pace of customer demand and that if left alone, could take away the majority of your business, if not all.

Clayton Christensen entrepreneur, professor of business administration at Harvard University and author of many books on disruption and other topics, has spent the majority of his professional career studying these situations. In his bestseller, “The Innovator’s Dilemma,” he describes in detail this situation in various industries and provides “how to” advice in order to adapt and stay competitive. Today we’re going to touch at a very high level just one principle: Separate the business.

In studying great firms that were once industry leaders and then later failed due to disruptive technologies, there was one common theme among that survived—They set up a completely separate business that adopted the change and kept the original business but made some adaptations. The idea is that if you try to make a huge shift in the way you do business, you’ll lose a large portion of your current customer base and die from lack of income, but if you don’t make changes, you won’t be able to acquire the new type of customer and in the future you’ll be out of luck. The solution is to build a separate company with separate processes, separate employees, and separate financials that can rigorously adopt the disruptive changes taking place.

While this is easier said than done, it is a must do. For more on the subject, see “The Innovator’s Dilemma” or other sources of literature that discuss this process. In a world of fast changes, you’ve got to change fast!

– Your financial, legal and tax professionals at GQ Law.