Technology is constantly changing, and as an MSP you’re at the forefront of what products and services your SMB customers want. With new disruptive technologies coming into the marketplace on a daily basis, it can be hard to keep up. Disruptive technology is a cheaper, easier way to produce the same product in a new way, such as Google Maps replacing navigation systems.
With emerging trends in the marketplace, how do you know when it’s time to jump on board with a new technology and when you should wait it out? Recently we read The Innovator’s Dilemma by Clayton Christensen and discovered why some companies fail when a new product is introduced. Although you may think you’re safe from disruptive advances in the market—you aren’t.
Sustaining and disruptive innovation
In the book, Christensen explained that there are two types of innovation: disruptive and sustaining. Sustaining innovations keep reducing defects and are continuously improved by the company. However when innovation stops or stands still, it opens the door for startup companies to emerge. “It is a company’s customers who effectively control what it can and cannot do,” says Christensen. Ultimately, the market is controlled by the demand for services in the marketplace.
The book focuses on how certain inventions have disrupted the commercialized industry, such as how Toyota disrupted the market with the Corolla, causing GM to lose profits. While this may seem to represent only B2C (business to consumer) products, the fact is that disrupters can enter any marketplace at any given time.
Even services can disrupt a marketplace. As an IT service provider, you have replaced the need for in-house techs for many of your customers. Instead of SMBs hiring an in-house tech for $60,000 a year, they can have you manage their IT at a fraction of the cost. This disruption helped the MSP market blossom, and it allows SMBs to focus on other aspects of their business. As MSPs continue to expand over time, they need to continually adapt and change to avoid having their business be disrupted as well.
Consider how cloud computing has changed the marketplace as more and more applications move to the cloud. Case in point, Office 365 has taken the industry by storm. Not only has it reduced the need for infrastructure and hosted Exchange servers, but it has also reduced the need for techs to go out and maintain them. Depending on how you look at this, it could be an opportunity or a loss for your business.
Moving forward with Office 365 is almost inevitable if your SMB customers are asking for it, though. “In order to survive, companies must provide customers and investors with the products, services, and profits that they require,” says Christensen. If you fight this, you risk losing market share, he explains.
Innovation doesn’t stop, and when more than one competitor have a solution, customers are forced to decide. Their decision isn’t always based on which product has the most technological advances. “Once two or more products are offering adequate performance, customers will find other criteria for choosing. The criteria tend to move toward reliability, convenience, and price,” says Christensen.
How you can adapt
As an IT service provider, you need to keep disruptive technology in mind and stay alert to how quickly the technology landscape is changing. Will there be a new product that replaces the need for managed services? Probably not. However, your products and services offering needs to continually change to adapt to the marketplace. If you don’t move forward, you risk losing SMB customers who may be looking for the newest thing. Staying on top of innovations happening in the IT channel can help you get a leg up on your competition and secure your foothold as a disruptive competitor in the marketplace.
The Innovator’s Dilemma
By Clayton Christensen
286 pages. Harper Business. $10.11.
Have suggestions about what we should read next? Leave a comment and let us know what we should add to our MSP's bookshelf.