Everyone’s heard the term ‘market disruption’, but what does this term actually mean once you get beyond the hype? Is disrupting a market a good thing? And if so, how can you find opportunities to disrupt the market you’re in?
Defining market disruption
A market is truly disrupted when an entrepreneur or business comes along which fundamentally changes the dynamics of that market. The digital age has been defined by market disruption, as new, digital first businesses have come along and disrupted their analogue predecessors.
Streaming is the classic example here. The music industry reacted with natural dismay as Pirate Bay started making copyrighted material freely available online. While the music industry was fighting the pirates however, new streaming services emerged which streamed content legitimately, and, before long, the entire music industry was forced to adapt to the new digital reality – or fade away.
The same story was repeated in the movie and TV industry with Netflix and similar introducing on-demand viewing. This innovative new service, combined with a reluctance to change by at-the-time suppliers such as Blockbuster, resulted in the thriving of the former company and the demise of the latter.
Beyond entertainment, we’ve seen similar disruption in industries ranging from everyday shopping which has been hugely disrupted by ecommerce businesses such as Amazon to simple taxi firms, which have had to face the challenge thrown down by Uber, Lyft and others.
Market disruption means a market no longer functions as it used to, leading to a sudden and sometimes drastic change to the status quo. As a result of market disruption, many organisations within that market will have to undergo a significant revamp and rethink business models and strategy.
Is it good to disrupt the market?
Depending on which side of the disruption you fall on – the disruptor or the disrupted – disruption of the market can be a good thing or a bad thing.
As the disruptor, you get to temporarily dominate the market and direct the attention to your own products and services. Behind this however, comes a huge amount of risk. For every successful story of market disruption, there are likely many more which didn’t take off. The question will always be, is this new disruptive way of delivering a given service going to work? Do consumers want it?
This risk can be expensive too. Most market disruption these days is driven by increasingly sophisticated technology, often involving advanced algorithms and AI programs. This means the barriers to market entry are high. The cost of developing a novel AI solution will definitely run into the tens of thousands and, depending on how far you want to take it, there’s no upper limit on costs.
As the disrupted, market disruption can be either a negative or a positive, depending on how you respond to the changes. Looking back at Blockbuster, a reluctance to change and rise to new consumer expectations resulted in a sudden and dramatic drop in market share and ultimately, the end of the company.
If an affected company thrives on the new disruption and grows with it, a period of growth and rejuvenation is possible. Alternatively, as demonstrated by the recent GameStop rally, if a legacy company can capitalise on its brand and the good-will and nostalgia associated with it, a place can be found in the new digital marketplace. Another example of this is the ‘vinyl revival’, as consumers complement their music streaming with the collection of old-fashioned vinyl records.
The disruptor mindset
Whether you are a new or established business, market disruption is possible, but how? Here are some things to think about, and help you get into the disruptor mindset!
Redefine a service
In order to disrupt a market you need to offer a radical new alternative to the current products or services being offered. By redefining what consumers should be expecting from their providers, you have a chance to meet these new, higher expectations and inspire consumers to make the change to your company.
Simplify and smarten
For many consumers, the introduction of new products or services often comes at the expense of simplicity and accessibility. If you want to disrupt the market, you need to find a way to smarten up the products or services you offer, while maintaining ease of use and good UX – always focus on the end customer.
How did Facebook become the world’s predominant social medium? With a good, well designed and carefully considered UX.
Prioritise and position
In any market, the big players will have reached a state of saturation, where they have a large and loyal customer base that they can rely on. This loyalty can be challenged however, with the right service and the right positioning. A disruptive company will position itself as a name that prioritises the satisfaction of consumers, and make a bold, brash statement in doing so to get their attention.
Is it worth disrupting the market?
Disrupting the current market can be a daunting and risky process. However, market disruption is exactly how many of the world’s, biggest existing conglomerates, came to be as successful as they are. Indeed, disruption is progress. The automobile industry disrupted horse drawn carriages, just as Thomas Edison disrupted the candle and oil lamp industries – and most of us would rather not go back to the pre-disruption days in these markets.
It takes planning, guts and great ideas but done right, market disruption can change not just your business, but your entire industry and maybe even the world.