As a key player in your organisation, keeping up with the latest industry trends and developments is part and parcel of your role. That’s often easier said than done though.
With new disruptors entering the market almost every month, existing companies need a plan to survive and thrive.
Before you devise strategies to deal with change, be sure you’re aware of these three myths about disruption.
1. “A Disruptor Attacks Price First”
You could be mistaken for thinking the disruptor’s motto is “hit ‘em at the bottom line”. Yes, the cheaper-faster price model is an obvious disruption (as is evident in Myth #3). But a disruptor’s pricing strategy can be more sophisticated.
High-End Disruption: Telsa Motors
Tesla’s decision to sell their uber-cool electric cars first to the luxury market has paid huge dividends to the company.
Telsa took market share away from luxury brands Mercedes-Benz, BMW, Audi and Lexus. Expect to part with $150,000 – more with options – on Tesla’s flagship Model S sedan. Then came the Model X SUV, complete with futuristic gull-wing doors. No more visits to the dealer for compulsory servicing. Or to the service station. Ever.
Enter the Model 3. In his launch speech for the new Model 3, Telsa’s CEO Elon Musk thanked wealthy owners of his Model S & X for the Model 3. Why? They paid the R&D costs of this new, affordable model.(1)
For a conservative price tag of $35,000 you get an all-electric car with many of the advantages of its high-ticket sister models. Less if you include generous US-based incentives. And the only running costs are tyres and brakes.
Overnight, Telsa became a vehicle for the masses, as well as the elite.(2) And with the car industry disrupted, the effects of Tesla’s entry will resonate for years to come.
1. After models S, X and 3, rumours are that Elon Musk’s next model will be named “Y”, making their range “S3XY”. back
2. Tesla took 180,000 orders for the Model 3 in the first 24 hours – more than any product ever in history. back
2. “Disruption Happens Fast”
Disruption often appears to evolve at a rapid pace, almost uncontrollably so.
The tourism industry is being disrupted by the likes of AirBnB, taxi and transportation by Uber, and Tesla Motors are making waves in the car industry (see Myth #1).
But organisations and industries can be disrupted over years, even decades. Just ask incumbents in print media. Online disruptors usurped print media’s advertising cash cow, and left them reeling.Organisations and industries can be disrupted over years, even decades. #disruption Click To Tweet
Steady Disruption: Craigslist, Ebay, realestate.com.au, seek.com, Google AdWords as Disruptors
Not much needs to be said that hasn’t already about online advertising. What was once the monopolistic turf of print publishers worldwide, the internet “democratised” advertising and levelled the playing field for us all:
- Ebay empowered individuals to auction their wares to a global audience for free.
- Seek and it’s online companions tore the heart out of print’s job ads.
- realestate.com.au, domain.com.au and friends took care of property sales and rental listings.
- Bing and Google’s AdWords allowed anyone to advertise for minimal investment, and adjust their budget on the fly.
Remember Kodak? The company enjoyed an impressive 90% market share for almost 100 years. They survived decades of disruption from digital camera manufacturers before they finally collapsed into bankruptcy in 2012. (3)
After 44 years of publishing, Cleo magazine printed its final edition in January 2016. 110-year-old Hollywood stalwart Variety magazine was snapped up in a fire sale by a “blog company”.
It’s not news that traditional magazines and newspapers are struggling.
3. Many of Kodak’s patents were snapped up at bargain prices by Apple, Google, Facebook and others in 2013. back
3. “Disruption is Technology Based”
This is perhaps the most dangerous assumption for organisations not operating in the digital or IT spaces. New or freshly applied technology is not always to blame for being disrupted. Many times it’s the way a product or service is delivered, how a client is serviced, or simply a product that targets ‘fringe’ clients of an incumbent industry. Enter Wavestorm.
Lo-Tech Disruption: Wavestorm
Wavestorm is an American-based surfboard manufacturer. It’s a simple business model: make a board, sell a board. There’s nothing particularly exciting about the product. They sell at America’s discount giant Walmart. There are no new high-tech components, no slick distribution system or even sexy new styling. Wavestorm has one distinct disruptor, and that is price.
If you’ve considered taking up surfing, you’ll realise just how damn expensive those entry-level surfboards can cost. “Kooks” (or newbies) can expect to part with upwards of $700 for a board they’ll use a for few months before having to reinvest in an intermediate board. Wavestorm realised the barrier to entry for many was price so set about designing a lightweight, easy-to-use board with a low price point. All those customers ignored by the incumbent brands are now flocking to Wavestorm for their gear.
And Wavestorm is servicing them – they have a range of boards for “kooks” to pro surfers. Wavestorm is disrupting the market and making their brand incredibly “sticky” through customer loyalty.
Let’s face it, disruption is here to stay, and its global effects will touch – if not upturn – every industry imaginable. Whether you’re in enterprise, mid-size or small business, how well prepared you are for disruption will determine how well you fare.
Often, disruption occurs when companies are slow to react to or ignore a market disruptor.
Facing disruption is never easy. Tough decisions need to be made. But with the right strategy, it is possible to come out on top.
- Learn how to leverage disruption – here are three questions to ask right now.
- Infographic: Learn how to chose the right disruption expert for your organisation in The Disruption Speaker Scale
- Watch Are You Disruption Ready Video – 2min 38sec.
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