Competition keeps any industry healthy—it prevents stagnation and stimulates innovation. But competition is symmetrical: two or more players vie for market dominance, following the same rules and playing the same game. When the competition is asymmetrical and disruptive, it becomes a whole different ball game. So, how do you spot a disrupter?
What is disruption?
In our case study and strategy guide “Disrupt or become disrupted”, we quoted David Rogers’ definition of digital disruption as being:
A disruptive challenger must possess a significant differential on two sides of their business model:
- A difference in value proposition that dramatically displaces the value provided by the incumbent (at least for some customers)
- A difference in value network that creates a barrier to imitation by the incumbent
Market disrupters do not need to reinvent the wheel, but rather identify strengths, weaknesses, opportunities and threats inherent to their target market. They then disrupt this market by offering a product or service that has a value, or generates demand, that cannot in any way be replicated by the competition. The logical consequence of a disrupted market? Businesses have a tough time competing with a disrupter, as they are playing a different game to them.
How to spot a disrupter
Before being able to follow a strategy to defeat disruption, you need to know how to spot a potential disrupter. This can sometimes be harder than it sounds. You’ll know your industry is being disrupted if your company, and your other regular competition, cannot answer the threat of a new player and find that you are losing a portion of your target audience to said player. This means that not every competitor is automatically a disrupter, and at the same time that not every disrupter is necessarily a direct competitor of yours. Disrupters can come from anywhere – which is what makes them so unpredictable.
An example of a digital disrupter
Let’s look at the hospitality sector. People needing a bed will generally stay in a hotel or any other form of traditional accommodation, such as a B&B or a guesthouse. Hospitality businesses will compete with each other through their value proposition, innovative marketing strategies and by adopting agile business model strategies to get the edge on each other. But at their core, they are still offering the same base product and operate on a level playing field.
These same businesses also compete with online travel agents (OTAs). OTAs make it simple for the consumer to find the right accommodation as they aggregate all the information like prices, reviews, availability and, often, discounts. But OTAs need hotels—more specifically, they need beds to sell. And hotels need the OTAs, as they have better market penetration and can fill vacancies more easily. So, while they compete for the cream, they both still operate on the same playing field.
And then there’s Airbnb. This is a company that doesn’t need the hospitality sector’s beds, as their business model has potential lodgers stay directly with homeowners instead. They also don’t need an online travel agent, as customers speak to the homeowners without an intermediary. Airbnb offers a better, faster and more flexible service as an alternative to potential customers. Hotels and OTAs have no immediate response to this, making Airbnb a key disrupter of the hospitality sector.
Disruption can happen in any industry
Once you understand how to spot a disrupter, you’ll see there are numerous examples of disrupters, even in industries you might not think of. Take Tinder, for instance. Like Airbnb, Tinder offers a more flexible and mobile solution to what other online dating agencies offer, as they still rely on subscriptions and screening. By doing this—and Tinder actually disrupted itself first to come to this business model—they managed to market themselves in a niche industry that was seemingly locked down.
Most businesses keep a close eye on their direct competitors and are always innovating in order to be one step ahead of them. That is the very nature of business. But a company must also know how to spot a disrupter. In fact, you should be looking to become that disrupter yourself before anybody else.
To find out more about disruption, how to approach it and how to become a disrupter nobody seems to be able to compete with, download our eBook.digital disruption