EPE, Netherlands — Disruption can be defined as a decisive break from the past, a moment in the development of an industry or market in which new methods or technologies give overwhelming advantage to early adopters.
This can rapidly make established methods obsolete, so companies relying on tried and tested methods are at grave risk of being left behind — as seen in industries ranging from information technology and entertainment to retail, finance and transport.
In manufacturing, disruptive technology has seen us move from high levels of automation to something potentially more interesting: Full mass-customization, in which even complex products can be built to individual specifications, and in very small batches.
Many cars, for example, can now be configured by customers, choosing from thousands of options to build a vehicle customized to their own tastes.
As a direct result of disruption, data now is being talked about as the "oil of the 21st Century," and several of the world's largest companies by capital value did not even exist 20 years ago.
Do not underestimate the power and potential impact of disruption — it's going to affect us all. At times of rapid and potentially high-impact change the only safe strategy is to move fast yourself. If you stick with what you know — as it's the "safe" thing to do — you are likely to suffer.
Others will undercut you on price and take market share bit by bit, while newcomers, perhaps from different industry sectors, likely will redefine your core market and take high-value growth business by deploying new and disruptive ideas.
New entrants may not have the strong brand and long-term trust levels, but they will have agile business structures, lean, low-cost infrastructures and a complete absence of legacy. That means they always will beat traditional companies on cost and usually can move faster.
Moreover, a low-cost base, absence of "digital debt" — as represented by old-world systems — means new players can afford to take more risks, test concepts, fail fast and try again.
Therefore, the safest course now is not to let others disrupt you. Instead, disrupt yourselves.
Disruption already has happened in the tire industry. Decades ago, the introduction of radial tires gave huge first-mover advantage to the innovators who developed this approach. Several leading players lost traction and went into decline. Early adopters saw rapid international growth.
We at VMI Group also have played our part in causing disruption. Automated tire-building, based on our own Maxx technology, changed the game for many. Investment in automated machines has made it possible for smaller, newer companies to reach the highest quality levels and target sales to major industry players at premium prices.
That has driven rapid growth for many new entrants and has seen new centers of excellence in tire-building appear across the world. It has permanently changed the market.
In the next two decades, we expect the pace of disruption to increase and, though it is rash to predict the future, we believe that three main drivers for large-scale change will prove especially important.