top of page
Search

From Monkey Business to Market Leaders: How Disruptors Turn the Tables in Established Industries

  • Writer: John Vassh
    John Vassh
  • Apr 11, 2024
  • 7 min read

The business landscape is a battlefield, and complacency is the enemy. Once-dominant industries can crumble in the face of innovative upstarts wielding the weapon of disruption. It's a strategic dance of innovation, agility, pricing, and understanding the true needs of your customers. Let's explore the many methods of disruption, from cost-cutting strategies to game-changing technology, and how to leverage them to conquer your chosen market.


In the world of innovation, pricing isn't just a number – it's a weapon. By strategically tailoring pricing models to the unique needs and budgets of specific markets, even established industries can be upended. This targeted approach unlocks the potential to disrupt, offering a more accessible or valuable proposition that resonates with a previously under-served segment, while shaking up the status quo.


The vast majority of highly commoditized low margin competitive businesses rely primarily on factors such as cost and convenience in order to drive their bottom-line. Buying gas is a great example, as the majority of consumers hunt the cheapest price per gallon in order to top off their tank.


Businesses set prices for less commoditized offerings with a degree of uniqueness using brand recognition, disclosed or undisclosed intellectual property, perception, consumer expectation, what is already present in the market, and the retention or appreciation of the initial value proposition.


Both business models and product offerings depend on proper product management and price elasticity to achieve a balance between profitability and consumer acceptance in relation to market demand. To understand how value-add initiatives and price points are set in a market, we first need to grasp the current players and landscape.


In the age of information, with access to purchased private databases, it's fairly typical to see competitors follow suit when a supplier raises prices. This begs the question: is the production cost truly increasing, or are industry players colluding to carve up market share?


Price fixing remains illegal under the Sherman Antitrust Act. However, the increased access to information and the use of sophisticated pricing tools can blur the lines of collusion, especially when data brokers and third parties are involved. This can raise ethical concerns about the use of these tools and the potential for anti-competitive practices.


But cost disruption is just one weapon in the arsenal for gaining or expanding market share. Let's delve deeper into disruption by exploring additional methods, such as convenience, technology, innovative business models, and a focus on customer experience.


Cost Disruption:

  • Streamline operations: Utilize technology or automation to reduce production and delivery costs, allowing for lower prices.

  • Target underserved markets: Offer affordable solutions to previously neglected customer segments.

  • Adopt alternative materials or production methods: Find lower-cost ways to create the same product or service.

  • Offer a freemium model: Provide a basic version of your product/service for free, with premium features available for a subscription or fee.


Convenience Disruption:

  • Simplify the user experience: Make your product/service easier to understand, use, and navigate.

  • Increase accessibility: Provide your product/service through multiple channels, including mobile apps, online platforms, or on-demand services.

  • Offer personalized experiences: Tailor your product/service to individual customer needs and preferences.

  • Improve delivery and fulfillment: Focus on faster, more convenient delivery options.


Technology Disruption:

  • Integrate new technologies: Leverage advancements in areas like AI, blockchain, or automation to offer enhanced functionalities or improve efficiency.

  • Create entirely new product categories: Utilize new technologies to develop innovative solutions that didn't previously exist.

  • Improve data collection and analysis: Use data to personalize experiences, predict customer needs, and optimize operations.

  • Develop alternative communication channels: Utilize AR/VR, chatbots, or other emerging technologies to interact with customers.


Business Model Disruption:

  • Subscription/Contractual models: Shift from one-time purchases to recurring revenue streams through subscriptions or long-term contractual agreements for greater convenience, recurring revenue, and deeper relations.

  • Sharing economy models: Facilitate peer-to-peer sharing or rental of resources instead of individual ownership.

  • Direct-to-consumer (D2C) approach: Eliminate intermediaries and sell directly to customers, potentially offering lower prices or more control over the customer experience, branding, and valuable customer data.

  • Freemium-based data monetization: Offer a free service supported by data collection and monetization through targeted advertising or partnerships.

  • Circular economy model: Design products and services with reusability, repairability, and recyclability in mind, minimizing waste and environmental impact.


Focusing on Customer Experience:

  • Omnichannel experience: Provide seamless and consistent customer experiences across all touchpoints, whether online, mobile, or in-person.

  • Hyper-personalization: Leverage data and analytics to personalize products, services, and marketing messages to individual customer needs and preferences.


The business world thrives on innovation, and sometimes that innovation takes the form of disruption. Take Uber and Lyft, for example. These companies leveraged mobile apps to revolutionize the taxi industry, offering a more convenient and transparent ride-hailing experience. Similarly, Airbnb upended the hospitality sector by creating a peer-to-peer accommodation marketplace, providing unique and affordable stays.


In the realm of entertainment, Netflix's subscription-based streaming service disrupted the video rental industry by offering a vast library of content with on-demand access. And who can forget SpaceX? This company is shaking up the aerospace industry with its reusable rockets, aiming to make space travel more accessible and affordable, of which, all Americans should be grateful from a national security perspective. These are just a few examples of how companies are reshaping entire industries through creative disruption.


To further expand on these ideas and share additional resources, please enjoy some fascinating articles on current challenges and opportunities related to market disruption.


Articles of Interest:



And let’s not forget this oldie but goodie from Clayton:


  • The Innovator's Dilemma (1997): Christensen's influential book introduced the concept of disruptive innovation. He argued that successful, established companies can fail because they focus on improving products for their most demanding customers (sustaining innovation), while overlooking simpler, more affordable solutions (disruptive innovation) that eventually displace them.


Now empowered with a diverse arsenal of disruptive ideas, the question becomes: how do you, the aspiring initiator, prepare for your own industry-shaking moment? Imagine yourself as David, wielding the potential to topple a giant like Goliath. Here, we'll outline the steps you should consider as you gather your metaphorical “sling and stones" – the tools and strategies necessary to disrupt your chosen marketplace.


Preparation and Research:


  1. Deep dive into the industry: Conduct thorough research to understand the existing players, their products/services, pricing, business models, and customer pain points. Identify inefficiencies, unmet needs, and emerging trends that could be potential avenues for disruption. Leverage industry reports, academic research, and competitor analysis tools for insights.

  2. Identify your value proposition: What unique value will you offer to customers that existing players don't? Focus on solving overlooked issues, providing substantial experience improvements, or addressing unmet needs entirely.

  3. Choose your disruption strategy: Several approaches can be employed at once, depending on the industry and its characteristics:

  • Cost disruption: Offer a lower-cost alternative or a freemium model, making the product/service more accessible.

  • Convenience disruption: Make the product/service easier to access, use, or customize, improving user experience.

  • Technology disruption: Leverage new technologies like AI, blockchain, or IoT to create a superior offering or streamline processes.

  • Business model disruption: Introduce a new way to deliver value or capture profits, like the sharing economy or subscription/contractual models.


Developing Your Solution:


  1. Develop your product/service: Focus on delivering a solution that effectively addresses the identified needs and leverages your chosen disruption strategy. Utilize agile development methods to allow for adaptation based on market feedback and iterative improvement.

  2. Assemble your team: Build a diverse team with expertise in the industry, technology, business development, and marketing. Look for individuals with a passion for innovation and a willingness to challenge the status quo.


Execution and Growth:


  1. Prepare for resistance: Established players will resist your disruption. Be prepared for challenges, adapt your strategy as needed, and build strong relationships with potential allies and partners who might benefit from your innovation.

  2. Build a strong brand: Communicate your value proposition clearly and consistently through compelling marketing and branding strategies. Build trust and attract customers by showcasing how your solution addresses their needs and surpasses existing offerings.

  3. Stay agile and iterate: Continuously evaluate your progress, gather customer feedback, and adjust your product/service and marketing strategy. Be prepared to adapt to changing market dynamics and embrace continuous improvement.


Additional Considerations:


  • Ethical considerations: Ensure your disruption creates positive societal and environmental impact alongside economic benefit. Remember to consider the human element.

  • Regulation: Be aware of any regulations that might impact your business and ensure compliance to avoid legal roadblocks. Know the law of the land.

  • Collaboration: Explore potential collaborations with established players or other disruptors to leverage shared resources, expertise, and navigate complex landscapes.


Disruption isn't just a buzzword; it's a constant threat and an unexpected opportunity. Companies must scout the future, investing in structures that explore disruptive ideas, even if they seem less profitable initially. Organizational agility is crucial, with autonomous divisions currently leading the charge in developing disruptive technologies and business models.


The key takeaway? Don't get complacent. While established customers are important, clinging to outdated business models can leave companies blindsided. Investing in disruption and remaining nimble are the hallmarks of long-term success. Let's unleash the potential for positive disruption. Thank you for the privilege of your time.







 
 
bottom of page