Disruptors are being 'disrupted'!
I have been thinking about writing this piece for some time now. The term ‘disrupt’ is being highly used and often abused in today’s startup environment. A google search leads to the following result (snapshot below).
Two key points to note:
1. The term disruption is not necessarily a positive term as per the dictionary. Strange for a term being used by almost every Business today
2. Looking at the graph, it’s clear how the use of this term has skyrocketed and these are just figures till 2010. I can only imagine how the graph would have gone out of the roof in 2016
A close look at the term being used today reveals that every differentiation from competition is being increasingly termed as disruption. To highlight the difference, here’s an example. Disruption would be when the offline FMCG distribution market was being transformed online. This meant that the centuries old supply chain was ‘disrupted’ with middlemen like distributors, stockists etc. being marginalised and retailers directly connecting with the brands/manufacturers.This would have led to a lot of upheaval and protest by the affected stakeholders in the supply chain however, it also meant that there would be a lot more transparency in the system and both the retailer and customer would have benefited from it. While it has the potential to further reduce customer prices, the retailer margins could be the same or even increase.
Now when newer players enter the fray and change the Business model like inventory led or no inventory, it cannot termed as disruption and should be seen as a competitive differentiation. The challenge occurs when the focus on disruption overpowers the focus on execution and customer/user experience.
In today’s world the focus should be on the value (differentiated value) to the customer/consumer and in educating them about it. The other bullish focus should be on execution as more often than not the devil lies in the details. These fundamentals should hold good for any Business whether you are a B2B technology platform, an internet consumer product or some other line of Business.
Some of the biggest companies today were not necessarily the first movers or ‘disruptors’ in today’s terms. Facebook or Twitter weren’t the first social media platforms with the first recognisable social media site being Six Degrees created in 1997. When it comes to Search engines, the first search engine created was Archie (short for Archives) back in 1990. ALIWEB, Yahoo! and many others were some of the other first movers way before Google came into existence in the search engine space.
In India, we have recently seen some of the earliest movers/’disruptors’ in the startup ecosystem downsizing or shutting down. One of the pioneers in the budget stay space in India recently shut down while the competition continues to have a high cash burn-rate to acquire customers through heavy discounting. Similarly some of the other first movers in the hyperlocal commerce space have pivoted or shut shop while smaller players with a maniacal focus on unit economics and customer experience have thrived and are slowly but surely scaling.
With some help from external factors like funding slowing down, VCs focusing on important metrics like unit economics, profitability etc., startups are shifting focus on execution and user experience. Execution along with being adaptable to market demands is crucial to sustain growth and find the sweet spot of a Business model. Along with that it’s equally important to drive the right messaging to the targeted audience on your differentiated value. The customers today like to make informed choices and hence, caring about their ease-of-access and providing them with all the relevant information will go a long way in your products being adopted and repeat business.
Post this article, I have decided to take this term out of my vocabulary :)