Would be entrepreneurs can take years trying to think of ideas or even problems that they could solve to potentially launch a startup. Most new startups though are based on iterations of an existing product or service slightly improved or innovated. Google was not the first search engine. Nike was not the first athletic shoe. Facebook was not the first social media company. Two out of the three companies (Google and Facebook) actually launched with a strategy of “free” to gain traction and disrupt their competitors. Even companies like YouTube, Instagram, LinkedIn and WhatsApp launched with a business model of free. They bet that if they were successful, they would figure out how to monetize the business later. Risky but it paid off for them.
So here is a thought. What if you strategically looked at
industries that have risen rapidly or those that have stagnated and you
purposely looked to disrupt them with a slightly innovated product or service
that is only marginally better than the current offering but you changed the
business model so that you could compete effectively?
 |
| Strategies for Entrepreneur |
Here are five
strategies to fuel a startup and potentially disrupt an industry:
Target an industry
that is ripe for disruption: Some
industries have already been famously disrupted: entertainment with Netflix,
Uber with taxi services, AirBnb with rooms and houses. Blockbuster, regional taxi companies and
hotels believed that their industry was immune to disruption because their
regional market dominance created too high a barrier to entry, the business
model or technology needed was too complex, the investment in required assets
was too high and the old standby, it hasn’t happened yet, so it won’t happen.
What large industry is just sitting on their heels and ignoring their current
or potential new customers?
Identify a disruption
strategy: Disruption can come in
many forms; you need to identify which strategy to take. The most obvious and
well used strategy is to disrupt the business model of competitors by
introducing a lower-cost version or a free/ freemium/premium product or service
business model. Facebook, LinkedIn, Google and Dropbox were all initially free.
There is however a counter strategy; create a superior
offering. Go into a highly commoditized marketplace with a product that creates
new value. As mentioned above, Chewy did this in the pet industry. Silk did it
in the milk aisle and Beyond Meat is disrupting the meat aisle with plant based
meat substitutes.
Find a new tribe /
new value: Disruption doesn’t have
to be about “stealing” someone else’s customers or putting people out of work.
The airline industry has been routinely disrupted by new entrants that bring in
low-cost business models. Ryanair is a great example of this in Europe. There’s
little or no evidence that they grew by stealing customers from Lufthansa or
KLM. By offering better or short routes that no one else did at prices that
competed with trains and buses they created an entirely new market of budget
conscious travelers. So, an important step in disrupting traditional industries
and marketplaces is to find new value that will attract new customers.
Fight from within: Don’t try and disrupt a mature industry from
the outside. If you are on the inside, then you work for an established
organization and their mantra should be, “disrupt or be disrupted.” If they are
not paying attention, then use your expertise to disrupt them. Or better yet,
take insiders with you who are experts in the field to lead the disruption
charge. I worked in the advertising industry, gained my experience and then
co-founded an integrated marketing agency with an expertise in digital
marketing that grew to $1.2 billion and disrupted the advertising industry.
Exploit your size: Large organizations, despite them being full
of smart people, are vulnerable to disruption because of the very things that
have made them large and profitable: by focusing on shareholder return. They
tend to repeat what is working and often hesitate to innovate for fear of
losing existing customers. Start-ups by comparison can operate with speed and
urgency, make decisions with incomplete information, identify customer
needs/problems and relentlessly seek-out product/market fit by pivoting
rapidly. If you are the disruptor, you need to do all you can to make the most
of this inherent advantage and scale as fast as you can. A great example of
this is what Netflix did to Blockbuster.
Source: Forbes
Comments
Post a Comment