Disruptive Business Models
The majority of businesses follow what can best be described as a conventional route. In other words, they tend not to be ‘disruptive’ by their nature. They will enter into an established market, usually with a product or service that has been down before, often having been developed somewhere back in the mists of time, and pursue a path that will – hopefully – see them experience an incremental growth in their business, while sticking true to their business model.
But, imagine instead a business that is born by – literally – breaking the rules. One that takes an established market and turns it on its head. One where a product or service is devised that is, no other way to describe it, a game-changer.
The world is littered with some fabulous examples of this form of disruptive thinking. Where entrepreneurs and, indeed, established businesses have truly innovated new ways of tackling a problem, and completely changed the market sector into the bargain.
Take for example Uber. Unimagined only a decade ago, this major disrupting force has already revolutionised private taxi hire, in only a few short years. But, who would have thought, given conventional lines of thinking that a phone-based app, linked to GPS and a communications database, could completely change the way in which we hail taxis?
Such is the power of this amazingly lateral thinking that it has heralded calls to be banned and for restrictive practices to be introduced, as it serves forever to change the market and, at the same time, disrupt the status quo, especially among black cab drivers.
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The fight between Market Research and Disruptive Business Models
Of course, truly disruptive thinking cannot, by its very nature, be predicted. It’s a business model that market research cannot accurately buy into. Indeed, among many other quotes attributed to him, Henry Ford was reputed to have said “If I had asked them what they had wanted, they would have said a faster horse.” And, with the greatest respect to many well established and successful businesses which go from strength to strength in mature markets, offering little by way of innovation, it is often our cloistered, conventional, blinkered views which restrict our capacity to innovate.
Now, it is true that it’s sometimes the established players which will come up with clever, different, innovative products and services – sometimes in a flash of genius and, on other occasions, out of corporate necessity.
One such example is Sony, with their Walkman, released on the unsuspecting world back in 1979. The idea was simple – and quite genius. The cassette player was already a well-established music playing device, and people already had portable transistor radios by the million. But, what Sony did was truly innovative. It took the cassette player, married it to a set of headphones and marketed it as a portable, personalised music source.
And that’s the clever point. Market research may well have said that people didn’t see the value in lugging a cassette player around with them, preferring instead the portability of a miniature radio. But, by combining the unique benefits of each device, and marketing it as a product that espoused personal freedom of choice, Sony was onto a winner.
Of course, once you’ve innovated, you have to keep a weather eye on what the competition is doing, as your competitive advantage can so easily become eroded. And, indeed, Sony found that to its cost – quite literally – when it came to the convenience of Apple’s iTunes store. Similarly, there is the current situation with Tesla, the electric car innovator. Initially, the American company headed by the ‘serial disruptor’ Elon Musk, had a very significant advantage in the marketplace, garnered by building swift, executive electric powered luxury saloons and SUVs.
But, pretty soon, the established competition, having been well and truly caught napping, realised their error, and have begun to prototype, market and in some case already sell their competing vehicles. And, for businesses such as Jaguar, with its ePace, Audi with its eTron models and Porsche with the MissionE, they have the benefit of being established brands, with existing customer loyalty, a dealer network and all the infrastructure that automotive sales requires. So, the question is, how long can Tesla survive, and can it maintain its disruptive business model advantage?
So, the moral of the story is – if you want to establish a business in a crowded marketplace, there’s every advantage in thinking differently, as Steve Jobs said. But, it’s something you need to continue to do, otherwise the competition won’t idly sit by and do nothing.
Creating the strategy and thinking about Disruptive Business Models can be challenging – seeking outside support and advice to gain independent thinking and clarity can make the difference to this challenge.
Thinking in a disruptive way – that would be Yorkshire Powerhouse
Now you’ve read our article on disruptive business models – have you any more questions?
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