Breaking an old business model is always going to require leaders to follow their instincts. There will always be persuasive reasons not to take a risk. But if you only do what worked in the past, you’ll wake up one day and find that you’ve been passed by.
Clayton Christensen – Disruption Theorist and Writer
Clayton Christensen is the current guru of business and personal disruption. His pattern of business disruption is all too familiar. Competitors with new platforms and new business models enter a market because they see opportunities to make money, satisfy customers effectively, or make a difference if they’re a non-profit. The startup or disrupter starts by developing lower cost or lower quality products or services but at an acceptable price to the customer. Or, the startup offers an innovative app, product, or service. These apps, products, or services capture the customer’s attention and gain market share. Innovative products and services are eventually tweaked and improved so the startup can go up-market.
So, what happens to existing companies? Existing companies choose to ignore or dismiss these startups. Big companies will say: ‘we’re big and smart’; ‘the entrant is stupid and can’t scale’; or even ‘this too shall pass’. Or, there may be other excuses and rationalizations.
Existing firms continue to pursue their higher margin, high-quality, branded, and high-volume business. Over time, the startup disruptor achieves an acceptable quality level in a niche segment and then in a broader part of the market. This way, the startup gains traction and competes with existing companies.
Work Lesson Earned: If you’re a small business owner in COVID time, professional service firm, or contractor pay special attention to the Christensen disruption model. If you’re an employee of one of these large companies, be ware. Acknowledge your old ‘is’ has changed and now you need to deal with the ‘as is’ or what ‘can be’ of your new work, career, and job realities. Things that were iron-clad promises such as promotions, work, and even pensions may disappear in the blink of an eye. Companies owe you nothing!