By Stephen Scheeler, Former CEO ANZ, Facebook; Founder, The Digital CEO and Chairperson, CEBIT Australia
With disruption being such a buzzword these days it seems that nearly every entrepreneur or start up founder is looking to disrupt their industry and rightly so.
However, disruption isn’t simply a matter of shaking things up and hoping that something somehow transforms. There’s some method behind it. Here are the key ways some of the most successfully disruptive companies went about things.
Disruptive companies refine their business model
One main thing all disruptive companies have under their belt is that they created a solid business model and then continued to tweak it until they got it right. Netflix is a prime example of a company who did this due to increased competition and a willingness to embrace technology.
The company is now so successful that we often forget that it was originally founded as a simple DVD mail order business. It was a low tech – make that no tech - business that just set out to replicate Blockbuster through the post.
At first content to meander along, they soon recognised that with broadband becoming cheaper and faster, they needed to start investing into a new model called streaming. They started putting more money into investigating that and less into their traditional model. By getting into streaming, they essentially disrupted themselves. In 2013 they took it a step further and produced their first piece of original content in the hit series House of Cards. Now five or six years later they are the biggest producer of original content in the world producing more than any Hollywood studio in just five years.
By changing their business model, culture and skill sets, they morphed from a DVD mail order business to a global tech giant. Now that’s a transformation.
Disruptive companies get on board with consumer trends before they’ve even trended
Have you been completely content to live without something in your life … until someone actually showed it to you? Customers suddenly thirsting for something they didn’t even know they wanted is one of the holy grails for any business. Basically, if you can anticipate a trend before it happens you’ve got it made.
In 2010 Facebook noticed there was a little app out there that had one very unusual thing going for it. Whilst the app only had a few thousand users, it also had a very high engagement. Its users spent a huge amount of time on it – particularly young users.
This app was purely about sharing photos, whereas Facebook was primarily about sharing text. Facebook was able to pick up on the faint noise that sharing photos was about to become a major trend. They cannily acquired the app known as Instagram which now has a staggering billion plus users on the platform. In order to get on board with disruption, being able to identify the faint signals of an emerging trend is invaluable.
Disruptive companies focus on smaller markets initially
Start-ups with fewer resources can look at disrupting things by focusing on smaller, overlooked segments first. Once they capture the imagination of the market with something that’s loved, it’s often just a matter of time before interest spreads to the mainstream and significant disruption happens.
AirBnB is one company that has done this well. In the beginning they focused on launching at major events where it was tricky for people to get hotel accommodation. Gradually the platform grew to offer accommodation to anyone in need.
Another classic example is Twitter which began as a simple SMS app for people messaging friends. Now it’s grown exponentially to be major network for information and is used extensively for business purposes.
Disruptive companies build a big fan base
For a product to be truly disruptive, you need to create and nurture a lot of buzz. Apple is one company which has become completely disruptive due to their die-hard fans.
Personally, I believe the next big thing which is going to send people wild and blow up branding is voice technology in the home. By some estimates in the future 30 per cent of all searches in the US are going to originate through voice. So, if you’re in a business dependent on keyboards this is going to be a big challenge. I think people will start treating voice technology like their own personal assistant which is going to be super disruptive to searches. Once it starts working well, I think people everywhere are going to embrace this.