Industry Disruption is when a smaller company, with less market share and resources, is able to make a successful challenge against a larger, more established, company is a particular market or niche. A good example of this would be Netflix overtaking blockbuster, facebook messenger overtaking MSN messenger, and Uber taking a large market share from traditional taxi services.
In this article, we will look at ways to determine when an industry is ready for disruption and what a business should have in place before it attempts its challenge.
Consumers Have Lost Confidence In The Industry Leader: This can happen for several reasons. The most common is a recent history of poor quality products or services that failed to meet the expectations of their customer base. Another major reason is consumers begin to lack trust in the leading company. A current example of this is Facebook. According to a recent YouGov study, 66% of polled individuals say they do not trust Facebook with their data. It can be very difficult to regain consumer trust, especially when an alternative product or service is presented.
Business Practices Are Not Changing Despite Customer Feedback: When companies grow large and successful they have a habit of tuning out their consumer base, thinking that they know better. When one can observe that an industry leader is no longer responding to consumer feedback and keeping the same business practices that the consumers are speaking out against it may be time for industry disruption.
Technological Advancements Are Not Being Implemented: When industry leaders fail to implement new technologies relevant to the industry this is usually a clear sign that disruption is near. A good example of this is rideshare companies and traditional taxi services. The taxi services could have adopted their version of an Uber type interface, but instead didn’t; choosing to stick with the standard phone and wait, model. This choice was largely because they felt they had complete control of the market and did not need to invest in innovation. Once again, a clear sign of a disruption opportunity.
Current Business Practices Are Inconvenient: One of the reasons Amazon became so popular was because of the level of convenience they offered the customers. Many large brick and mortar stores, like Sears, ended up going out of business because they were late to adopt a convenient e-commerce platform. If technology exists that makes the customer experience more convenient industry disruption is likely near.
What Does A Business Need In Place Before Attempting Disruption
Have The Solution
Market disruption, properly planned, can mean immense profits for a business. The most common way a business successfully carries this out is if they have some sort of technology that can change the industry. Whether this is something that lowers production costs, changes the way consumers use the product or service, or simply just increases convenience. Just because a business can recognize issues in how the industry leader is operating if they do not have the solution they will not succeed.
Have The Right People
Brian Weaver CEO and Founder and Torch.ai stated: “I try and get our most talented people as close to the customer and the problem as possible.” If a business or does not have the necessary people in place they will not be successful.