In a perfect world, you and your business are the revolutionary disruptor that’s driving progress and redefining your industry. In the real world, though, you’re far more likely to find yourself sitting on the sidelines as a competitor rolls out a transformative new innovation. Knowing what to do when this happens can make all the difference for your business’ long term success.

A failure to respond appropriately to a disruptor can eventually render your business obsolete, while responding well can allow you to take advantage of incredible new opportunities.

Don’t double down

The least productive response to progress is defensive resistance. Numerous massive enterprises have collapsed due to their unwillingness to embrace change in the past, and there are plenty of examples of corporations who are in the process of joining them today. A notable example would be a massive energy company like Exxon, which invests an enormous amount of time and money into protecting its existing business model even as renewables startups drive the price of wind and solar energy below that of oil and even coal in some parts of the world.

At best, an incredibly powerful corporation might be able to lobby for bureaucratic and legal barriers that might delay the inevitable, but progress can’t be halted in the long term. Furthermore, disruptive change represents an opportunity to adaptable and enterprising businesses that should be seized rather than resisted.

Study the disruptor

Businesses that come out of nowhere to make breakthroughs that disrupt an entire industry are doing something right. To be able to compete against a disruptive competitor, you’ll need to catch up. How have they disrupted your industry, and what innovations catalysed this change? These kinds of transformative events don’t happen the same way every time, and it’s important to understand the situation before you attempt to react to it. There are two primary types of disruptive events.

Cost disruption

An innovation that greatly reduces the cost of providing products or services can allow a disruptor to severely undercut competitors. These improvements can be visibly revolutionary, like Henry Ford’s vehicle assembly line, or something as mundane the automatic checkout machine at your local supermarket. The result is the same in that the business taking advantage of these innovations are cutting costs to outcompete others and take control of an industry. Typically, a well established industry leader would cause this kind of event, because they’re more likely to be able to invest the resources necessary to improve upon and optimise existing technologies and procedures.

Evolutionary disruption

Let’s refer to a disruption that outperforms existing products or services on every level as an evolutionary disruption. Edison’s light bulb didn’t necessarily need to be cheaper than whale oil and candles, it was brighter, cleaner, and simply better. These kinds of disruptions can transform or replace entire industries, rather than taking control of an older one. Unlike cost disruptions, these are often brought about by outsiders and startups who bring an entirely new approach and way of thinking about the problems that an industry is trying to address.

Learn what you can, then take charge

The way you respond to a disruptor depends strongly on the specific cause of the disruption, and on the tools at your disposal. Cost disruptions can sometimes (but not always) be adapted to by simply changing a strategic production process, or purchasing a different type of tool. Evolutionary disruptions are much more drastic, and can require complete overhauls, restructuring, new equipment, retraining, and entirely new products or services.

Adapting in this way is not, however, enough to compete. Companies who only try to match the accomplishments of their competitors become “knock-off” brands by default. To re-establish yourself in a real way you’ll need to counter-disrupt your competitors. The breakthroughs that characterise disruptions are new and revolutionary by default. Because of that, they’re often not fully developed or optimised by the time they’re rolled out. This leaves a window of opportunity.

Work with your own experts to reexamine and rethink the disruptor’s innovations and work to improve on them for your own benefit. That doesn’t have to mean finding a way to undercut a competitor who’s already undercutting existing market prices. Instead, you might be able to use the same cost savings to upgrade your product instead of lowering your price.

For example, if one smartphone manufacturer managed to drastically reduce labour costs and used those savings to cut prices, another could respond by cutting costs in a similar way, but then putting those savings to work on creating a better product instead of cutting sales prices. Customers would see the new superior product at the price that they’re used to, while the initial disruptor is left looking like they’re trying to offload last year’s knock-off.