Disruption
And how to use it.
Governments and companies love the concept of stability. They like everything to be planned and predictable. They like the people and the markets to fall in line and toe the line with the status quo. One of the reasons is that a stable system insulates power. Those who have scale and power get to keep it and can use the stability of the system itself to insulate from the loss of power.
Everyone hates change. Everyone hates disruption to stability. Except those who don’t want to stand in line. The problem with a stable system is when you don’t have power; the rules of a stable system dictate that you have to ask permission from those who do have power. The cards are stacked against you.
I would argue that those systems, governments and companies that allow facilities for occasional disruption have a better chance of longevity.
But how do you go about disrupting a stable system? How to you counter the mass and the inertia of the status quo? Many times it is by doing something that market leaders don’t want to do and finding a way to do it better. ‘Doing it better’ can be across a spectrum of applications of product innovation, service innovation or delivery innovation.
The one form of disruption I want you to think about today is the ‘low end’ disruption – the disruption that is caused by entering at the low-end of a market and eating the big guys up from the bottom. You can use low-end disruption to flank the power structure.
We in industry have seen the pattern repeated globally many times. Find any market where there is low margin business that the big players look down on and you have an opportunity to disrupt them.
Look at what the Japanese manufacturers did to disrupt the auto, motorcycle and many other durable good markets. When they first entered the US market it was with low-end, cheap, economy models. The US car makers didn’t want this business because it low margin, they didn’t’ make enough money on it. They could sell one 22 ft long Caddy and make more profit than 4-5 little economy cars.
The Japanese figured out how to make the cars at a lower cost and a higher quality and do it with a volume that gave them the same or better profit margins. They repeated this methodology in many categories of durable goods – starting with the low end and driving efficiency and quality – until the market leader went under or were forced to retrench.
They did it by embracing business no one else wanted and figuring out how to do it and make money.
Southwest used the same model taking the regional routes to less glamorous places because there was no margin in those routes for the big airlines. They created an operating model to do it profitably. Southwest is consistently more profitable and growing faster than the big carriers.
Many of the global outsourcing players started by taking the non-glamorous, low margin work and figuring out how to deliver it better.
Why do you care?
Because in your world you will naturally want to do the glamorous, high-margin work. You will only want to work on the projects that have import and meaning. You will be looking for ways to maximize your personal profit margin.
That’s not how you disrupt a market. That will only get you into line with all the other people who are smart and work hard. The way, or at least one way, to disrupt your personal trajectory is to find those things that no one wants to do and do them so well that people are shocked.
If you want to move to the front of the line take on one of those projects, or clients whatever the low-margin stinkers and clunkers are in your market. Embrace them without being asked. Figure out a way to change the rules, to do things better and work them to success.
Don’t make the mistake of avoiding the low-end of your market. Figure out how to use that category in your life to move to the front of the line.
Everyone else will be clamoring for the rock-star accounts. They will be expected to do well. When you take on the stinker, on purpose, and succeed anyhow – people will take notice.
I’ll tell you a story. More than once in my career I have moved to a new company and it was a sideways move in hopes of a better opportunity. When you move to a new company you are immediately at the end of the line and at the bottom of the pecking order and they would give me the stuff no one else wanted to work on.
My mode of operation was to throw myself into these unwanted situations with optimism and vigor. Did I subsequently get given the good projects to work on? No, I did not. I got taken out of line and promoted and all the people working on the good projects worked for me now. And that’s my point. That is your take away. You are not looking to play the game better you are looking to disrupt the game and create inflection points.
Don’t play by the rules. Change the world.