If you’re an entrepreneur or considering creating a startup, disruption should be your north star. Disruptive companies don’t just succeed in a market – they totally rewire it, forcing incumbents and legacy businesses to play by new rules.
Often predicated on innovation, disruption is a compelling way to skyrocket your business from small-scale victories to massive, industry-defining successes. But how does an entrepreneur know if an industry is ripe for disruption? What are some conditions, environments and systemic issues you can look to as clues?
Here’s how to tell if your industry is ready to be disrupted.
The most basic criteria to look for is consumer dissatisfaction. In an industry ripe for disruption, consumers are never pleased about the products/services available – they may tolerate them for lack of options, but they aren’t happy.
Look at what Uber did to the taxi industry. Taxi fares, availability issues and inconveniences had long been a consumer pain point, but taxi companies had consolidated enough power (more on that below) that consumers had no other option. Uber was able to disrupt the industry by addressing that dissatisfaction head-on.
A subset of consumer dissatisfaction is distrust. Are consumers wary of the large companies in your industry? Are they tired of how little transparency and accountability exists among practitioners? Then your company can be disruptive by delivering honesty and consumer-centricity.
As an example, look at what Nobul has done in the real estate industry. Consumers were fed up with a perceived lack of options for finding real estate agents; they were fed up with opaque commission fees, doctored reviews and inaccessible resources. That left the door wide open for Regan McGee to launch his end-to-end, consumer-centric marketplace.
“Nobul brings choice, accountability and transparency to an industry that has – for decades – been widely regarded by homebuyers as opaque and challenging,” McGee told Superb Crew. “Anytime you bring innovative technology to the table that can make the process easier, it will be viewed as disruptive.”
When Clayton Christensen first coined the term “disruptive innovation,” he described it this way: “Entrants that prove disruptive begin by successfully targeting… overlooked segments, gaining a foothold by delivering more-suitable functionality—frequently at a lower price.”
In other words, an industry is ripe for disruption when its core product is prohibitively expensive and therefore neglects to service a large segment of the buying population. This allows a company to swoop in with “low-end disruption.”
A classic example of low-end disruption is iTunes. At a time when digital downloads were primarily localized in online pirating communities, Apple leveraged the concept to undercut the traditional CD industry, offering digital downloads at a fraction of the cost.
Finally, you can spot an industry ripe for disruption by looking at how power is consolidated. If the industry is run by a handful of companies – an “oligopoly” market structure – then there is probably space for new innovations, new products/services and new pricing structures. According to Forbes, industries with highly consolidated power structures tend to be resistant to innovation and change.
Does your industry tick one of these boxes – or all four? Then you might be in a prime disruptive position.