- How Does Disruption Occur?
- Know Your Disruptor – It’s Not that Guy
- Can Tradition Defend Against Disruption?
- Get Intimate
How Does Disruption Occur?
Airbnb, Uber, and Lending Club each have made extraordinary penetration into standardized, established industries. That disruption is not limited to just a few industries, though. Enterprise-ready cloud systems make it possible for that same type of disruption to be replicated throughout world markets. That’s why digital consultant Greg Satell has suggested that cloud may be the most disruptive technology of all time.
What industries are currently being disrupted by cloud, and what are typical characteristics of disruptors? After all, you want to be the disruptor, not the disrupted.
One of the major players in this process is the industry cloud. The combination of enablers and disruptors fuels the astronomical growth of this segment of computing. Organizations such as Guidewire, Veeva Systems, and Opower accelerated incredibly in recent years as enablers of improved operations in their specific industries (insurance, life sciences, and energy).
Simultaneously, disruptors are being created – businesses designed in efforts to cause upheaval. Those are the businesses such as Airbnb (hotels), Uber (taxi services), Zillow (realtors), and Lending Club (online bankers).
These disruptors have essentially created a different type of industry cloud. Rather than taking the existing system and working with it, they have started from scratch. In the marketplace sense (both on the business and the consumer side), what they have done really is revolutionary. Meanwhile, companies that failed to adopt ever-evolving technology in their operations became increasingly unprofitable, making it difficult to survive. The end result was that they had to seek the help of a business broker (who has the necessary expertise on “how to sell your business“) in order to recover a significant sum. In such cases, a famous line in business seems to be true-either you acquire or you are acquired.
“These companies leapfrogged existing industry constructs and built direct consumer-to-provider marketplaces where none previously existed,” explained Emergence Capital co-founder Gordon Ritter. “The new marketplaces give consumers a straight, non-stop, path to goods or services, and by directly connecting consumers with providers, [create] greater customer intimacy.”
Know Your Disruptor – It’s Not that Guy
In the world of cloud, disruptors tend to have the following six characteristics:
- Tools for marketplace interaction – These systems bring service providers and customers together through intuitive, well-organized portals. For instance, Lending Club allows lenders and homebuyers to directly interact without the use of banks, highly disruptive to the mortgage market.
- Better consumer engagement – Disruptors engage consumers by giving them more power, “allowing them to choose how/when to [interact] with suppliers/sellers,” noted Ritter. “Airbnb hosts forums where suppliers and renters can provide feedback, share photos and see reviews from other renters.”
- Immediate customer access for providers – Disruptors tend to cut out the middleman and establish transactions directly between consumer and provider. Zillow serves as both an enabler and a disruptor with its “Make me Move” feature, which allows homeowners to notify homebuyers that they would sell their house for the right price.
- Lower cost – When you get rid of the middleman, they no longer need to be paid. Oscar has become an insurance disruptor by cutting broker fees.
- Consumer-ready mobile platforms – These companies have built their systems essentially based off of consumer need, focusing centrally on mobile – although usability is variable. Lyft and Uber have disrupted the taxi market with intuitive apps (and Uber perhaps by cutting out http://money.cnn.com/2014/11/18/technology/uber-unethical-peter-thiel/ the middleman of ethics), while Airbnb has ridden high on its business model without much attention to UX (I’ve personally shouted at the latter app’s poor design).
- Generally lower regulations – Any industries that don’t have as many governmental controls are more susceptible to disruption because its more possible for providers to access customers without sidestepping the law. However, a different model is being built in those fields: “Interestingly, in these industries,” Ritter commented, “the leading enablers are becoming the disruptors by working within the system.” Athenahealth’s HIPAA-compliant portal is one example.
Here are industries currently experiencing disruption from the cloud:
|Finance||Square, Lending Club|
|Real Estate||Zillow, Compass|
|Hotel||Airbnb, Hotel Tonight|
|Education||Fedora, Khan Academy|
|Healthcare & Life Sciences||Doctor on Demand, ZocDoc|
Can Tradition Defend Against Disruption?
The short answer is no.
“Within 2-5 years the current leaders will need to choose between being disrupted or enabled,” said Ritter. “They can … build a better offering for customers, or they run the risk that industry-specific technology companies bypass [them].”
Disruption won’t be immediate, though – especially in highly regulated industries, where enablement will be more common.
The second and third characteristics listed above have to do with engagement and access between consumers and providers. The result of a stronger connection, bolstered by ratings (sometimes from both sides, as with Airbnb), is a sense of customer intimacy. That intimacy is critical to disruptor success and should be core to the mission of companies using cloud to re-envision long-established industries.
At Superb, we offer that same sense of intimacy for our cloud customers with communication, quick response, dedicated service, and teamwork – offering enablement to a growing list of successful clients.
By Kent Roberts