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BUSINESS IS PERSONAL MARK RIFFEY
WHY DO THEY WANT TO TDISRUPT MY BUSINESS?
HE BIG WORD IN THE STARTUP differently.
world is disruption, as in, “We will How do they disrupt my business? disrupt the what-cha-ma-call-it Mostly by taking the hassle out of it.
market.” Thinking about last week’s dis- cussion about buying a new vehicle, let’s talk about what disruption is and why “they” want to disrupt our market.
Some examples of disruption
Paypal disrupted the credit card mer- chant account market. Old news, but it’s a good example. At the time, it was a sub- stantial effort for a small business to get setup so their clients could pay them with a credit card – particularly if there was a website or phone sales involved. You could do it, but the fees and the startup obstacles put in place by the banks offer- ing merchant accounts were a time-con- suming hassle. The assumption was that you weren’t as “real” as a business selling hard goods out of a retail location. Pay- pal knew better and treated these busi- nesses with honor rather than suspicion and contempt.
Ultimately, Paypal made it easy to get a merchant account. They made it easy by allowing you to manage it online. Finally, they made it more secure by creating a layer between the client and the small business taking the payment. The client gained because they didn’t have to reveal their card number to the small business. The small business gained because the “layer” that kept the card number out of the hands of the small businesses meant Paypal took on the security requirements and many of the risks of card payment fraud. More secure equals less hassle. Eas- ier and less risk for all involved.
You can find many other examples of disruption in the finance-related sector – all of them based on eliminating the annoyances and artificial barriers estab- lished by long-term players in that field.
Other examples include Uber (Is the cab business focused on being a high-quality customer-centric experi- ence?) and SpaceX (Is the defense/aero- space business is designed to provide the best bang for the buck?).
Why do they want to disrupt my market?
Simply put, because doing business with you or your peers (or both) is a pain in the keister. When you make it hard to deal with you, you create opportunities for startups that don’t mind doing things
Those who disrupt your market talk to your clients and identify the things that drive them crazy about working with you. What keeps you from doing that? Noth- ing other than you being stuck in “We’ve always done it that way” mode.
The real estate market is a great ex- ample of how businesses get disrupted. Zillow produced a website that allowed would-be buyers to identify properties for sale before they were ready to con- tact a Realtor. Will they still have to work with a Realtor at some point? Probably. Before they “get serious”, are they re- quired to deal with the barriers that most real estate firms put in place? Before Zil- low and the like, it was all but a neces- sity. At that point, you did things their way on their terms. Today, you don’t have to engage a Realtor until you’re ready to take some action.
Could Realtors have opened up MLS to web access before Zillow appeared? Yes, but they didn’t. Could they have made it easier to shop before getting signed up with a Realtor? Yes, but they didn’t. In- stead, the MLS was used as a wall around the property-for-sale inventory. Until Zillow and similar vendors provided ac- cess to this data (or a subset of it), there was little if any pressure on real estate firms to implement such systems or rad- ically improve their processes to make them more client-friendly.
Eventually, they figured it out and cre- ated a new Realtors.com that competes with Zillow and similar sites.
Realtors are not the target
These types of problems are not unique to Realtors. They are common to many businesses.
If you look at these disruptive new businesses, they’re usually focused on eliminating the market’s pet peeves.
Referring back to last week’s car lot experience, consider the business model that Vroom.com has put together. It’s not perfect, but it does a nice job of elim- inating the horse biscuits from the buy- ing process. And yet, there’s not a single thing they’re doing that local car dealers can’t do.
Will they notice and adopt the best parts? And in your market, will you?
Want to learn more about Mark or ask him to write about a strategic, operations or marketing problem? Email him at [email protected].
JULY 29, 2015 // FLATHEADBEACON.COM
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