An approach that improves the ability to detect digital disruption is that of an edge team. In today’s age, businesses must stay agile to survive (Raconteur, 2015). A team that is positioned to scale on the edge of the organisation’s core business flow could ‘defend’ competitors from using niche markets to build momentum and trying to knock off the incumbent (Offit Kurman, 2012). In a way, operating in an edge market or business line can be used with the adage of “the best defence is a good offence” which has long been applied to concepts in war. It infers to that of being proactive instead of having a passive attitude. This will preoccupy opponents, ultimately hindering their ability to mount an attack, leading to a strategic advantage.
What is an edge team?
Edge teams refer to having a team that works on an area of the business that has high growth potential (Harvard Business Review, 2009). This area of the business is separate to the core business revenue streams and it shouldn’t cannibalise an existing revenue stream. Long term, it should ultimately become an additional core business stream. An edge team should need little investment to run (Deloitte, 2019).
Benefits to an ‘on the edge’ team
Having an edge team allows the organisation to act as a disruptor. The traits are similar to startups as they usually have “no resources, no employees, no customers, no suppliers, no factories, no brands, no established routines or rules how to do business … and no loans” – (Tekic & Koroteev, 2019, pp. 687). The edge team allows the core business lines to continue with their efficiency while the edge team contributes to balancing out the efficiency and enables the business to operate in the ‘Window of Viability’ described by Woods (2020).
An edge team allows CEOs to take less risk in moving resources from their core business which generates revenue and profitability (Harvard Business Review, 2009). Edge teams enable incumbents to detect competitors that may try to target emerging markets and reduce the risk of the Innovator’s Dilemma coming into play (Christensen, 1997).
Limitations to an edge team
Previously identified was that an edge team would need minimal investment. This in itself could be a limitation to the success of the concept. When an edge team is at a point in which an idea could be successful and scale, the business needs to decide if the product/ service concept will return on the investment. This could be flagged by the Executive Team through the internal rate of return (IRR) for the business as it could be lower than what is allowed by the business. Mckinsey & Company (2004) highlight that other projects may include reinvestment opportunities to calculate their IRR, ultimately inflating the number. This again highlights the Innovator’s Dilemma (Christensen, 1997).
CEO’s salaries are often tied to revenue and profitability. This could limit the investment that a CEO is willing to contribute as edge projects are less likely to generate revenue-producing outcomes in the short term (Bolger, Clarke, Haley, & Pitt-Watson, 2019). CEOs should avoid prematurely incorporating edge services/products into core the core business (Harvard Business Review, 2009).
As edge teams are low on resource, it may not be possible to cover all edge markets. A fail-fast approach involved in an agile methodology would be of benefit to aid in covering as much as many ideations as possible (Mcfedries, 2017).
Alternatives
As edge teams operate somewhat freely, this enables them to identify and use other detection strategies. The list of detection strategies is extensive but notable strategies include attending conferences and networking events; partnering with companies within the industry; visiting supply chain companies; looking at industry markets from around the world; reading industry articles; monitoring social media; tracking the news including regulatory developments, global events, government legislation and governing industry bodies; data analysis.
One of the most important strategies not mentioned is to adopt a design thinking approach which incorporates a customer-centric ideology. This will position the organisation to understand the needs of the customer and therefore likely to identify areas of potential disruption (Lewrick, Link & Leifer, 2018).