Disruption – We might've been wrong about how it works.
There's no such thing as a disruptive technology only disruptive customers.
I've been thinking about disruption lately and what goes into it. Any new technology is often cited as what drives the disruption of an industry or business. The pandemic accelerated the topic of "disruption" all around. I'm sure you heard overt proclamations like, "blockchain and crypto will disrupt the world!"
But that's not true it's not the technology itself but its startups and businesses which are disrupting established giants and industries by decoupling the customer value chain — picking one aspect of the business and doing it better than the incumbent. (Read: Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption by Thales Teixeira, Harvard)
We largely associate disruption with novel technology because it propels our deep curiosity to figure out the new tools and new technologies. This creates momentum in the market.
But look closely, even established giants who have strong emerging competitors in the form of startups disrupting the marketplace, all essentially use the same technologies as their foundation.
Think CRM – Salesforce v. Zoho, mainly similar offerings but each competes purely on a single yet different customer value chain – Salesforce: most expansive horizontal integration making the best customer success platform in the market while Zoho efficiently leverages software-specific market differentials making it 90% cheaper than Salesforce and empowers emerging business.
Now ask yourself, which feels more disruptive?
To better understand decoupling understanding the customer value chain is key. It's essential to observe each customer or prospective customer and map out all of the activities they need to perform to acquire your product and/or services.
In the beauty industry, the established retailer is Sephora.
You have to go to Sephora and sample beauty products because what goes well on my skin might be different from yours. You have to talk to a consultant, choose what to buy, buy it, take it home, replenish it. These are all of the activities in the customer value chain.
Birchbox, a subscription beauty box startup decided was focus only on the first part — the sampling of beauty products. Subscribe and get samples at home. Buy anywhere else — Sephora or Amazon.
So, decoupling is looking at one activity in the customer value chain and deciding to do it much better than the incumbent, and that is how disruption truly works.
Innovation in specific nested loops eventually changes the whole equation stack.
Uber wasn't what it is today, after research in its early days when you wanted to call an Uber, you would text message or call them. It would connect an Uber employee who picked up the phone or looked at the text message and tried to call car operators to send a car your way. Nothing was automated like it's today. But it was just this desire of people to not rely on the very bad taxi industry that was available to them.
"When little decisions that we consumers make, multiplied by millions of people … that’s what is disrupts markets."
If you're interested in learning more about Disruption, here's a list of academics whose works I am currently reading.
• Clayton M. Christensen – Harvard (https://hbr.org/2020/01/the-essential-clayton-christensen-articles)
• Gary Pisano – Harvard (https://www.hbs.edu/faculty/Pages/profile.aspx?facId=6530&view=publications)
• Jill Lepore – Yale (https://www.newyorker.com/magazine/2014/06/23/the-disruption-machine)
• Thales Teixeira – Harvard (https://digital.hbs.edu/people/thales-teixeira/)
This post was inspired by the book Unlocking the Customer Value Chain: How Decoupling Drives Consumer Disruption by Thales Teixeira.
Thank you for your attention and reading this far.
–C.