Today’s great companies win by disrupting stale industries. That is, the great companies of the 21st century destroy the status quo in ways that the incumbents never see coming. Google. Uber. Airbnb.
These greats didn’t make slight improvements to the search, transportation, and lodging industries. Rather, they strapped C4 to the existing model and blew it to pieces.
When you blow up an existing model, you upset the existing players. Those existing players then unite to launch a defense attack. Law suits. Smear campaigns. Anti-disruptor regulation.
How do you survive these defensive attacks? Easy. Constructive disruption.
Is Google evil? Who cares.
Is Uber safer than cabs? It doesn’t matter.
Is Airbnb a legal alternative to hotels? Irrelevant.
Google, Uber and AirBnB disrupt the right way. That’s why they are winning.
Follow these three principles to achieve constructive disruption.
No. 1: Be truthful and transparent
When disruptors challenge the status quo, questions regarding the disruptor’s legality or legitimacy often arise. We live in a world where corporate secrets can be unwound in minutes. With Twitter, Facebook, and LinkedIn, it is only a matter of time before the public uncovers the truth about a business. The most powerful tool for addressing legal and legitimacy challenges is transparency coupled with authenticity: tell the truth and make it accessible.
Take Airbnb. Airbnb’s online platform allows individuals to rent out their homes, rooms or apartments to visitors. This has caused massive disruption to the hotel industry by significantly undercutting the prices charged by existing providers. While this is not in itself illegal, some rentals may violate local housing laws and regulations. This is an issue the hotel industry incumbents are quick to point out.
How has Airbnb handled customer concerns? Transparently and honestly. A Google search for “is Airbnb legal” returns a result from Airbnb itself with links to specific city regulations.
This strategy is working. According to The Economist, if Airbnb continues to grow at its current rate, by 2016 it will gain 10% market share from hotels’ existing business.
Strategic transparency and honesty, particularly in response to legal or legitimacy concerns, will leave your customers better informed and more trusting as a result.
No. 2: Respond quickly and thoughtfully to attacks
When disruptors are successful, they undercut existing business models and anger the industry incumbents. Unable to successfully compete with the new entrant, the incumbents band together to launch smear campaigns. “If you can’t beat them, smear them,” they say.
Take Uber, the California-based ridesharing service. The incumbent “cabbies” hate Uber. They can’t compete on price, convenience or quality. In response, cab companies have launched an aggressive smear campaign targeting Uber’s potential safety issues. It’s called “Who’s Driving You?” sponsored by none other than the Taxicab, Limousine & Paratransit Association.
How has Uber responded? Quickly and thoughtfully. That same month, Uber launched its own “I’m Driving You” campaign and released a section of its website dedicated to addressing customer safety concerns. The website describes the “rigorous” background checks required for Uber’s drivers and goes out of its way to outline the safety advantages of riding with Uber versus the traditional cabbie.
Quick and thoughtful responses to competitive attacks increase your customers’ confidence and provide you with an opportunity to highlight your solution’s advantages.
No. 3: Focus on the customer
An industry is open for disruption when its customers are underserved by the incumbents. All successful disruptors have one thing in common: an unrelenting focus on the customer.
Take Google, the search-engine giant that everyone loves to hate. Countless individuals, firms and political organizations accuse Google of being evil due to the way it profits from users’ information.
Has Google wavered? Nope. It continues to “focus on on the user” and allow the rest to follow. Is Google collecting info about us for profit? Yes. I’m one of the people giving it to them. What do I get in return? Awesome free services ranging from GMail to YouTube. I’m a happy user.
When you focus on the customer, all else will follow.
In today’s socially connected world, constructive disruption is essential to a new entrant’s success. Winning the war against the inflamed incumbent requires transparency, responsiveness and an unflinching focus on the customer. There are numerous industries ripe for disruption ranging from food services to healthcare. Follow these three principles to disrupt the right way.
Rick Lindquist is CEO of Zane Benefits and co-author of “The End of Employer-Provided Health Insurance.” He has spent his career helping small businesses transition from employer-provided health insurance to individual health insurance, much to the chagrin of the industry incumbents.
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