5 Incumbents Becoming Disruptors
How are the disrupted becoming the disruptors?
Some incumbents are finding their feet and challenging new markets. Recently, D/SRUPTION discussed how incumbents can make the difficult transition from disrupted to disruptor with IBM’s Angela Bates. Her view is that success in the digital world relies on delivering customer centric products and services at speed. This can be a daunting task, especially for traditional businesses that are tied to legacy infrastructures and outdated strategic thinking.
Here, we take a look at five established companies who appear to be turning disruption into an opportunity…
Royal Bank of Scotland was founded almost 300 years ago. Despite this, the bank has kept ahead of the curve by experimenting with innovative products and services for its customers. In 2014, RBS launched the Innovation Gateway to help innovators, inventors and SMEs across sectors to trial ideas in a test bed environment. Two years later, the bank revealed a question answering AI to help staff with customer queries. This September, RBS announced the creation of an entirely digital bank called Bo which is expected to launch next year. The service will run as a separate operation with a focused office and team, mirroring the approach of digital first, customer centric challengers in finance. Bo is one of a number of projects that have emerged as a result of RBS’s goal to invest in digital and open banking. RBS has also demonstrated a clear willingness to support sustainability and reduce resource consumption, which is a fundamentally important consideration for any company with an eye on the future.
Originally called Liverpool Victoria, LV= was set up in 1843. In 2007, the insurance company changed its name, and has been changing ever since. LV= now has more than five million members and around 5,700 employees. In 2016, incoming chief executive Richard Rowney pledged £100m to digital projects that would help the insurer to move away from legacy IT. LV= has also invested in FinTech startups like Wealth Wizards. Ahead of his keynote talk at The Broker Expo, LV=’s Mike Crane stated that customer needs should shape strategy. The companies that struggle, he said, lack a clear purpose. As part of LV=’s vision, the insurance firm has recently launched a suite of new features to better address insurance needs.
Centrica is the largest supplier of oil and gas to domestic customers in the UK, operating as Scottish Gas in Scotland and British Gas in Britain. The company was established in 1997, when faster internet and DVDs were still just emerging trends. Over the past two decades, Centrica has recognised three major shifts in the energy sector: the decentralisation of the energy system, greater customer power and digitalisation. In response, the energy leader has pursued a strategy that focuses on satisfying changing consumer needs. As part of this aim, Centrica invested in blockchain energy startup LO3 Energy in 2017. The investment followed a statement that Centrica would commit £100m to identify, incubate and accelerate new technologies. By working with innovative startups and technologies, Centrica has taken advantage of disruption and retained its competitive edge.
Amongst a flurry of retail closures, IKEA‘s doors remain wide open. The Swedish home deco experts have been in business since 1945, and despite the move to digital, the company’s physical stores have remained successful. IKEA’s strategy has been to explore potential new technologies that could help extend the brand, including Augmented Reality. Through the IKEA PLACE app, shoppers can browse over 2,000 products and place them in any given room using AR. The retailer has also set up an innovation lab, Space10, to test prototypes and run events, exhibitions, and workshops. IKEA has also made strategic investments in young companies through its venture arm, GreenTech AB. One of these startups is Alelion Batteries, as sustainable lighting is very important considering IKEA’s warehouse sized showrooms.
French automotive leader Renault was set up in 1899. Over a century later, and the company is speeding forward in the electric vehicle sphere. Renault expects cars to become an extension of our homes by 2030, and has produced a concept model to demonstrate how. In the next few years, the automaker plans to release a fully electric car to follow ZOE, an affordable EV that went into production in 2012. Renault is also part of the Renault-Nissan-Mitsubishi Alliance, which is a cross sharing agreement between the three companies. Encouraging open innovation through the group partnership has benefited each party, as the Alliance is now the leading manufacturer of plug in EVs worldwide.
Digital disruption can be challenging for any business, but particularly for those born in an almost unrecognisable technological era. In order for long standing companies to maintain their positions, they must take a completely different, and sometimes a seemingly cannibalistic approach. Taking these risks, however, has certainly paid off for the above examples. Startups now look up to incumbents as long established, trusted companies, but also as businesses that have learnt to handle unprecedented change.
For D/SRUPTION’s insights straight to your inbox, sign up for our weekly newsletter.