SMEs are perfectly placed to introduce innovative products and services that broaden consumer choice. An inherent agility that comes from smaller teams mean they can then improve their offer, go upmarket and tempt customers away from larger rivals, achieving a sizeable market share and growing into major players. It’s all about working out what a customer needs and delivering it.
That’s disruptive innovation at its most basic.
For inspiration, here are ten brands who’ve pulled off that disruptive growth arc – and the innovations they’ve brought to their industries.
In 2007, roommates Brian Chesky and Joe Gebbia turned their living room into a bed and breakfast, purely so they could keep up with the rent. In 2008, joined by Nathan Blecharcyzk as Chief Technology Officer, they launched AirBed&Breakfast.com… and the rest is disruption history.
Airbnb (the name was stripped back in 2009) found the holy grail of disruption by successfully creating a whole new marketplace, and solving problems for two groups of people at once. Travellers on a low budget wanted rooms for a low price; homeowners with spare rooms sitting empty wanted ways to make them profitable. Airbnb offered a cloud-based solution - something far quicker and more direct than traditional agencies - and both demographics lapped it up.
The disruptive impact of Airbnb is only enhanced when you realise they don’t actually own anything. The infrastructure for bed and breakfast has been there for years - all Airbnb did was provide a platform for finding and booking short-term accommodation, and charge for using it.
Remember when Apples were expensive, incompatible not-quite-PCs only found in creative studios? Apple has successfully repositioned itself as a premium consumer brand, but that’s not the most disruptive thing they’ve ever done. Their real masterstroke was disrupting the consumer laptop market with the first iPhone in 2007.
From a tech perspective, the hardware itself wasn’t hugely disruptive – before the iPhone, smartphones were a business device; a development of the PDA that hadn’t quite reached general users. However, from the consumer market’s point of view, they were radically different, replacing keyboards with touchscreens and putting laptop-levels of processing power into your pocket.
It’s the business model that really made the iPhone disruptive. Hooking developers up with customers, turning a business-market device and the jargon word ‘application’ into something you’d use every day, and building software retail into the device’s OS rather than having other businesses handle it. Apple’s trick was to bring specialist offerings to a mass market, by solving needs people didn’t know they had.
50Cycles.com started with a classic model: find a niche product category, often relegated to a token presence in other retailers’ catalogues, and focus it.
At first, they imported the world’s best electric bikes to the UK, offering the widest selection in the smallest niche, and now they’re disrupting that market further with the first UK-made model.
Founding brothers Scott and Tim Snaith emphasise Search Engine Optimisation, knowing that they need to be top of the list for any electric-bike-related search terms. Their bricks-and-mortar operation is more targeted, with a small number of outlets in places like Bristol and Brighton, where interests in cycling, tech and environmentalism guarantee them local demand.
Their approach is tailored to platform and location, and they don’t treat either the physical store or the online presence as a necessary evil.
This is disruption at its most straightforward: flip the usual business model on its head.
Ask yourself – and your marketplace – a question like “what if consumers asked for the special offers they wanted, and businesses met those demands in return for word of mouth marketing?” That’s how Cahootsy works.
The idea seems absurd at first – it’s just not the way things work! Once you consider the factors involved, though – declining shopper loyalty, lack of familiarity with customers, and the rise of user-generated content as a trusted source of information – the initial idea starts to make sense. Cahootsy builds up from customer need rather than down from business strategy. If you want to sell things to people, start with what they want.
It’s the kind of innovation which arises if you regularly challenge your own operations. As part of strategic planning, establish how you’d compete with your own business if you were trying to take it on in the marketplace. Try it today.
‘Fast casual’ is another form of disruption in action: defying expectations by refusing to be pigeonholed.
Consumers don’t think of fast food as upmarket or healthy - quite the opposite. It’s supposed to be quick, cheap and indulgent. We know it’s junk, but we buy it anyway.
When trends such as the war on sugar and concerns about childhood obesity prompted a backlash against fast food, established brands in the sector struggled to reinvent themselves. Insistent marketing that emphasised calories, salads and new options couldn’t shift the general understanding of what fast food is.
Chipotle avoid being put in that corner by refusing to be called ‘fast food’ in the first place. Despite competing with fast food brands, their insistence on ‘fast casual’ means they don’t have a whole industry’s worth of baggage to deal with. Instead, they can concentrate on transmitting their own message of nutrition, integrity, and style… that just happens to be prepared really quickly.
Sometimes, disruption can be simple, straightforward – even as obvious as cutting out the middlemen.
Golfscape bypasses tour agents and travel operators, on the basis that people who want a golfing holiday would like a one-stop shop for booking the travel, the accommodation and the golf itself.
What JobsTheWord does isn’t groundbreaking – like most recruiters, their service matches candidates with vacancies.
The innovation is in how they do it – harnessing big data to provide a more accurate matching service that requires less input from job hunters and employees. Disruption can be as simple as finding a new way to do what your business does.
In 1997, Netflix wasn’t a threat as far as Blockbuster was concerned. They both rented films to people, but Netflix worked by mail while Blockbuster ran conventional store fronts.
In 2007, Netflix adapted their model to streaming while Blockbuster dug its heels in, doubling down on their retail locations.
In 2017, Netflix is creating award winning content and Blockbuster’s long gone. There’s a lot to learn from their story, but the biggest lesson for SMEs is to let the competition underestimate you – then surprise them with the extent of your innovation. Taking advantage of opportunities when they emerge allows relatively small brands to topple big names, or to take advantage while they topple themselves.
It’s hard to delete content from the Internet – between screencaps, archives, bots and reposters, chances are every message is saved somewhere. Snapchat throws that out of the window by letting photo and video content disappear. It’s a simple idea, but it’s brought the Wall Street Journal, Cosmopolitan and CNN on board – content creators who recognise that ten seconds are all it takes to send a message.
Snapchat has responded by adjusting how its offering works. The basic idea - content that definitely goes away – is still there, but now the platform allows for storytelling. Content can be linked, in the moment, and aggregated to create a collective experience that lasts far longer than the message does. Once everyone thought they knew how Snapchat worked, Snapchat kept on innovating – and it keeps paying off.
If everyone knows how your sector works, prove them wrong!
The secret to Zara’s success is all behind the scenes.
Using every scrap of real-time data available, this fashion retailer disrupts its own supply chain. Zara releases many, many product units in smaller-than-usual quantities, relying on quick data feedback and an agile production and distribution network to respond to demand. No stock of unpopular product builds up, and the breadth of their range means Zara has a reputation for driving the trends it rides.
The lesson? Disruption begins at home - changing your process can change the market.
Of course, now that they’ve grown, all these brands are big names in their sectors. They’ve reached a status that has to be maintained, and ripe for being disrupted by other upstarts. If you’re planning to take on a giant like this, learn from their stories.
Disruptive innovation often involves small-scale experiments with a lot of potential and the will to commit resources to them if they start to succeed. Go in cheap with a low-end foothold: be inventive, be brave, and be prepared to fail. It doesn’t matter if four ideas are a write-off when the fifth puts you at the top of your game.
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