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The Four Pillars of Disruption

I recently wrote about my experience buying a product for 0.27% of the traditional cost. I pondered whether this massive price differential was an example of disruption; how would traditional suppliers even begin to compete?

You can read the original article here. In the resulting discussion over on my LinkedIn page, there were some very good questions and challenges posed, and they deserve a comprehensive response. They cover what I’ve come to believe are the four essential elements that have to be in place for real sustained disruption to happen. They also touch on the challenges and responsibilities we consumers face – whether in business or personal purchases.

These four pillars are price, customer control, user experience and trust. In my view none of these alone is truly disruptive and market changing, but a gap in any one of them will lead to failure. In my recent experience, the most disruptive pillar was price; with a bit of research, I was able to find a replacement key for my car from China via AliExpress, for NZ $1.35 (including postage). Compare this to the $500 it was going to cost me to buy from the traditional supplier in NZ, and you can see we’re looking at an overwhelming price differential.   

Although my original article focussed on this price differential as a key trigger for abandoning traditional suppliers, my user experience through the initial website and follow up emails was good, I was in control and did all the hard yards in comparing and selecting options, and I admit to checking carefully before handing over my credit card details, while trust was still being established. But overall the time spent was a fraction of the “old way”. In other words, the disruption wasn’t just the price; it was also user experience, customer control, and (eventually) trust.

Now that I’m happy with the experience, I will be back – but a failure in any one of those and I would never have returned. Of course as a consumer I have to make decisions about the ethics of the supplier, and with sufficient choice I can do that.

Here are my thoughts on the four pillars of disruption: 

Price

It’s never just about price. Sometimes the price is about the same as the legacy product, but the value and choice are much better. Other times, the price difference can be too big to ignore, but the real benefits we get as consumers in our business or personal lives are flexibility and speed.

Customer Control 

We’re now happy to do all the ground work. Checking out AirBnB, writing reviews, comparing airlines and seats, managing our consumption, setting up payments.  As consumers we’re not only in control; we’re happy to accept the shift of the service overhead from the supplier to us. But only if the user experience is excellent.

User Experience 

A well-designed application and user experience that’s different from what was there before is often the hallmark of a disruptive service. The Uber app, the tracking of my delivery from China, the airline booking site, PayWave for banking – they all shorten our processes and make the experience easy. When trying to compete, suppliers have to look hard at the user need and join up parts of the bigger process.

Trust 

I believe that trust is the new core competency that will distinguish successful disruptors. When the promise is speed and agility in our decision-making, we don’t have time for the full due diligence we used to undertake for purchasing decisions. I may validate the supplier once, and then trust that the supplier continues to protect my data, maintain their skills and keep the application working. Lose trust and you’ve lost the business. I do note that legacy suppliers frequently leverage consumers’ fears around trust when they’re fighting disruption: “Can you really trust these up-and-comers?”.

In summary, while price is important, it’s not everything. To compete against disruptive challengers, or to act as the disruptor yourself, you must also challenge the core value proposition, think in terms of the customer experience, and be unshakeable on all aspects related to trust.

To discuss the topic further, please get in touch with the author, Paul Gordon, on 021 718 190.

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