Business Visionaries Don't Initially Aim to Cause Disturbance
Startups Don't Set Out to Fraught, They Expand Markets
It ain't always about wreckin' the existing game, y'all. Most new startups that shake things up in a market bring in fresh customers instead of snatchin' 'em away. They don't even call it disruption mosta the time. Nah, they'll take a old product or service, make a few tweaks, and then blare it as a disruptive innovation through heavy promotions. This is especially common in tech, where they don't like to admit they're copycats but call themselves disrupters instead.
Clayton Christensen coined the term disruptive innovation back in 1997, and ever since, it's become shortened to disruption. But, these days, startups resort to small adjustments and boast about it being a disruption. They figure the market'll reallocate resources, and consumers'll be better off for it, enjoyin' a more efficient experience. But, the right way to handle disruption is to bring in more and fresh customers, thus expandin' the market rather than chippin' away at the existing one.
A prime example is Southwest Airlines, who bought in a new breed of customers by offerin' no-frills, cheap tickets to help folks reach their destination quick. They attracted people who'd never flown before and managed to convince 'em to give flying a shot by offerin' prices that were only slightly higher than other travel methods but with the convenience of gettin' to their destination with minimal hassle. At the same time, other airlines saw an increase in traffic on the routes offered by Southwest, goin' on to expand the market overall.
So, is disruption a bad thing? It ain't the genuine startups' intention to disrupt the market. Their focus should be on identififyin' fresh market segments that others can't reach because of barriers like price, location, or other constraints. As long as startups spot these challenges or pain points and the dreams of the non-participants, and figure out a way to bring 'em into the mainstream by offerin' alternatives, they'll succeed in expandin' the overall market that every participant can benefit from. Startups that stick to this simple principle prosper and rise to the top of their industries. Anymore destruction that happens is just a side effect.
The entrepreneur's focus should be on expandin' the market. Their focus should be to bring in a lot more customers into the market instead of stealin' existing ones.
By Jim McKelvey, HBR 2020/07
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Successful startups often expand markets through disruptive innovation without harmin' their existing customer base by employin' strategic approaches. Here are some key strategies:
1. Identify New Market Segments
Startups can identify fresh market segments that aren't fully addressed by current offerings. This involves understandin' emergin' trends and recognizin' unserved or underserved customer needs. By focusin' on these segments, startups can create new markets without directly competin' with their existing customer base.
2. Develop New Business Models
Disruptive innovation often involves creatin' new business models that are distinct from existing ones. This can include subscription-based services, freemium models, or pay-per-use services. Such models can attract new customers who prefer these options over traditional ones.
3. Leverage Emergin' Technologies
Firms can leverage emergin' technologies like AI, blockchain, or quantum computing to create entirely new products or services. These technologies can offer unique value propositions that expand the market without directly competin' with existing products.
4. Adjacent Innovation
While not purely disruptive, adjacent innovation involves leveragin' existing strengths to enter related markets. This approach allows startups to expand their offerings by adaptin' existing technologies or services to meet new related customer needs, thus expandin' their market presence without alienatin' existing customers.
5. Strategic Partnerships and Acquisitions
Startups can form strategic partnerships or acquire firms that operate in adjacent markets. This strategy allows them to enter new markets quickly and leverage the acquired expertise and customer base to expand their reach.
6. Focus on Sustainability and Social Impact
Incorporatin' sustainability and social impact into their offerings can help startups appeal to a broader audience seekin' eco-friendly or socially responsib'l products. This approach can attract new customers who value these aspects over traditional offerings.
7. Iterative Innovation and Feedback
Continuously gatherin' feedback and iteratin' on products or services helps startups refine their offerings to meet evolvzin' customer needs. This iterative process ensures that innovations are aligned with market demands and can attract new customers without alienatin' existing ones.
By focusin' on these strategies, startups can effectively expand into new markets through disruptive innovation without harmin' their existing customer base.
An entrepreneur's focus should be on identifying new market segments and creating fresh experiences for customers, rather than directly competing with existing players. This approach, often referred to as disruptive innovation, can be facilitated through the development of new business models, leveraging emerging technologies, strategic partnerships and acquisitions, and remaining attentive to sustainability and social impact. By adopting these strategies, startups can successfully expand their markets without negatively impacting their existing customer base.
Successful startups expand markets through strategic approaches that involve identifying unserved or underserved customer needs, developing innovative business models, leveraging emerging technologies, forming strategic partnerships, and focusing on sustainability and social impact, among others. By adopting these strategies, entrepreneurs can create new markets without harming their existing customer base, leading to growth and progress for everyone involved.
