Disruption is a word that gets bandied about a lot, and it can mean a lot of different things. But through new research, we’ve discovered that business owners are prepared for almost none of them.
“Be prepared!” it seems, is not a motto that survived to adulthood along with the Boy Scouts.
In uncertain times, thorough preparation for a range of eventualities – even if they might seem a long way off – is the only way to protect against future risks. But too many SME owners find it hard to devote time to the kind of blue-sky thinking that disruption planning requires and instead default to an approach that is more akin to burying their heads in the sand.
So how much of a concern is disruption? According to business owners we surveyed, it’s huge. Almost all (96%) are worried about it.
And what actually do we mean by it? In this case it is any external influence that will fundamentally alter the operations or profitability of an industry or group of businesses. Examples range from government and regulatory disruption through to brand new business models like Uber and Deliveroo.
Pick your battles
In the wake of Brexit, several government U-turns and now an indecisive general election, business owners can be forgiven for turning their attention to legislative and regulatory disruption, and indeed almost half (46%) listed this as something they were worried about.
But the political threat may have been grossly exaggerated. Legislative change is never extreme and always slow moving, meaning that reaction times will be long and businesses will be unlikely to be caught out.
In contrast, threats that have been proven not only real, but devastatingly fast paced, like new technologies and new business models are generating much less concern (22% and 25% respectively). The hard truth is that some business owners need to switch their attention to the things that could seriously harm their business in the short-term, with little or no warning.
Fail to prepare, prepare to fail
Our survey found that just one in ten (10%) business owners has a plan in place to address disruption. There’s no panacea out there, but planning is an important first step. SME businesses may not have the resources to take all the necessary steps against disruption, but that doesn’t mean they shouldn’t start that journey. The hardest thing is finding the time.
One huge problem is that the time needed to plan and prepare for future disruption is taken up by business owners being managers – working in their business rather than on it. Building a strong management team that can take care of the business with only light-touch guidance is a crucial step on the path to growth, but it also frees owners up to devote real time to future-proofing the business.
Whatever your business ambition, unexpected disruption can rapidly affect your bottom line, wipe the value from your business and dry up the pool of perspective buyers. It’s not something that can be put off or side-lined – do so and you’ll likely find yourself caught out.
Building creative capacity
But being caught out is only part of the planning challenge. More serious is that without the foundations of a plan it’s impossible to unite your company’s brainpower and problem solving potential.
You should have a plan, to share and communicate what is being done in the business. But because the future holds so many unknowns, I often see owners resign themselves to uncertainty and deal with disruption when it arrives. In reality, planning isn’t a forecast, it’s a series of steps taken to ensure the future success of a business by stress testing it against different eventualities.
There are lots of people in businesses with great ideas and experience, but without a plan you can’t unlock the potential wrapped up within your management team. Without a smart, varied and creative sounding board, it’s unlikely that the ambitions of the business can be fully tested and explored.
The drive to overcome
As well as something to furrow brows and cause sleepless nights, disruption can be a positive force on SMEs.
A third (35%) of business owners say that disruption makes them more determined. Disruption could be good for business owners, by keeping them on their toes and ensuring they stay ahead of the game. Similarly, more than a quarter (28%) say that it makes them more ambitious.
I see in many of my clients that ambition and disruption are linked. Constantly innovating and questioning the status quo is a way to get to grips with disruption, and ensure that a business is on the front foot when it happens. If you can harness that drive for the benefit of your business it will stand you in good stead whatever disruption may come.
The most worrying statistic from the research is that nearly a quarter (21%) of business owners simply plan on waiting to see what happens. Whatever strategy you adopt to face the coming wave of disruption, inaction is the only one that guarantees failure.