Please stop misusing the world “disruption”
And that goes for “digital disruption” too. This word is meaningless in the context that you are using it.
Disruption is not a buzzword. It is not a service you can sell to clients. It is not a technology platform you can implement. It is not another word for “innovation”. And it certainly isn’t something that is “happening everywhere”. If disruption was happening everywhere then there would be nothing special, unique or advantageous about it.
A person can’t be a disruptor. Implementing a marketing automation platform, using cloud services and understanding big data is not disrupting anything (except my concentration when I laugh at your ridiculous claims).
OK smartarse. What is disruption then?
Disruption is the creation of a business or offering that displaces the competition in your industry by providing better value to customers. Often technology is involved, but technology is not what makes a business disruptive.
A great case study of a local disruptive company is Hello Fresh. For those of you that haven’t heard of them, Hello Fresh is a service that delivers boxes of up to a week’s worth of recipes and fresh ingredients to their customer’s homes at the beginning of every week.
Hello Fresh’s digital strategy identified that working professionals had difficulty balancing healthy eating with their busy working lives. Despite having a desire to eat healthy home cooked meals, professionals were too time poor to research new recipes, shop for ingredients and cook. Instead they would often order takeaway food as it was a faster and more convenient alternative, the downside of which is that it was more expensive and often far less healthy.
Hello Fresh then shaped its offering around this insight, combining the benefits and eradicating the pain points of each of these behaviours.
- Benefits of takeaway: faster and convenience
- Benefits of home cooked meals: healthy, variety of meals
- Pain points of takeaway: expensive, often unhealthy
- Pain points of home cooked: time taken to research new recipes, shop for ingredients, cook
A secondary insight that Hello Fresh capitalised on was the recent rise in customer demand for fresh produce. Consumers preferred the quality of fresh produce to the snap frozen or refrigerated produce sold by the now dominant Coles and Woolworths. However, purchasing fresh produce was often less convenient than shopping at a supermarket and had a higher price point. As Hello Fresh would be purchasing in bulk, they were able to pass on this cost saving to their customers offering farm fresh produce in their boxes at an affordable price.
With this offering, Hello Fresh is able to straddle and compete across two different industries – taking customers from retail (FMCG) and Fast Food. By having such a unique offering, they were also able to break away from competing based on price. Hello Fresh is priced midway between buying ingredients from a grocer and ordering takeaway making their business model sustainable and profitable.
There are many other local examples of non-tech disruptive companies. An oldie but a goodie is Virgin Airlines disrupting the domestic airlines industry in the early 2000s. Virgin capitalised on the customer insight that people loved the convenience of air travel for the time it saved getting to a destination. The issue for customers was that it was too expensive for most people to use frequently. Their research also found that customers did not place the same importance on prestige and service that the airlines believed they did. The value to the customer was the speed to their destination – not the meals, drinks and in-flight entertainment which really weren’t worth the cost on a flight under 3 hours.
As such Virgin stripped away all the complimentary “services” that came with domestic travel and created a no frills offering. By removing all the bells and whistles they were able to sell tickets at a more accessible price point for customers. In turn Virgin enabled more people to fly which increased the size of the airline market in Australia, stole market share away from the established players and created the budget airline industry spawning many imitators. All of this was achieved through an understanding of customers and creating an offering that better caters to them.
There are countless more examples of companies like this, all of which focused on providing value to their customers and in turn disrupting their industries.
Technology is an enabler not a disruptor. Real disruption comes from businesses that understand their customers, their needs and pain points and create offerings that address these to redefine the competitive landscape of their industry – often making their competition irrelevant or creating new industries. With an understanding of your customers you might well be able to harness technology in your offering, but this has come second to providing value to your customers.