Can large companies disrupt?

And indeed, should they even try?

In my last article I wrote about the recent loss of many well-known brands who were not able to survive in this era of mass disruption. I gave some practical advice on how large companies can better protect themselves from the forces of disruption. But, on the basis that offence is the best form of defence, should large companies seek to become disruptors in their own right?

Let’s start by examining what it means to disrupt a marketplace or industry. The best way to do this is to look at some recent examples. By now we are all familiar with the stories of Amazon, Airbnb and Uber to name few. Each have had a dramatic effect in their arenas. In the case of Amazon, they have practically caused the death of bookshops but not content with achieving that goal, they pretty much dominate online retail in the Western world. Uber made it easier to get a taxi and drove down the cost of a taxi ride. And now Uber is involved in many other forms of transport, including home food delivery. And Airbnb has had a big impact on the home letting industry and hotel industry by making it easier and cheaper for people to secure short-term accommodation. 

Each of these three businesses did several things in common, they:

1. Started with one product or service offering
2. Made it very easy to secure that product or service through the use of tech
3. Made sure their product or service was cheaper than the competition
4. Scaled quickly, and then once their brand was established
5. Expanded their offering.

If the above is the right model to follow, let’s examine whether a large company can go through the same process and look at what obstacles they need to overcome along the way. 

So the first thing you need to do is come up with a new product or service offering that is easy(ier) to procure and cheaper than the competition. Simple huh? Not really.

In an earlier article I wrote about what it would take for someone to become a game changer (disruptor) –  https://www.clustre.net/how-to-be-a-game-changer/. In this article I described my  recipe for coming up with a game changing idea. If you have the NAK you will:

• Never settle for the status quo. When someone tells you: ‘this is how it’s done’, always ask why?  Be obstinate. Nothing new was ever invented by slavishly following convention. All pioneers have this perverse gene in them – so don’t be frightened to question and to look for a different approach; you may well find a far better way of doing things.
• Always involve the intended end-user or customer in the design of a new product or service, to increase the likelihood of success. Clever ideas are only ‘clever’ if they deliver a genuine, end-user benefit. Genius has to be anchored in end results. So always put yourself in the customer’s shoes. What do consumers really want… how can you help them to find it… what is the simplest, most cost-effective solution? Very often, the answer lies in empowering the consumer to meet their own needs.
• Keep your eye on the bigger picture. Don’t just think about a particular transaction or process but focus on the over-arching need. So, for example, look at why people take out mortgages and see if you can help them meet that overarching need (to find a place to live) as simply as possible. In other words, focus on the end goal the rather than the means to that end.

If you follow this link you can read how one of the firms we represent help people conceive new products or services that are almost guaranteed to be a success – https://www.clustre.net/how-to-remove-risk-cut-cost-and-ensure-the-success-of-new-products-and-services/.

In a funny sort of way, conceiving a new (disruptive) product or service is the easy part. As a former colleague of mine used to say: “it’s not those with the best ideas that succeed, it’s those that implement them!”. And herein lays the biggest problem for large corporates wanting to disrupt – their size, bureaucracy and processes stop anything at all risky being done quickly and quietly enough to have the desired impact. This problem has at long last been recognised by a number of the larger companies and specifically the banks. The solution is simple – you do the work outside of the normal confines of the company and essentially set up a start-up to do the work under a separate brand. Several of the UK banks are doing just this (such as RBS with its new bank called Bo and HSBC with Project Iceberg). Others will surely follow suit.

What a shame this path was not followed by Kodak who invented the digital camera as long ago as 1975. Somewhat scared by the implications for its film making business, Kodak let their patent on said device lapse. The rest, as they say is history. Had they set up a separate company to develop the digital camera Kodak would still be flourishing to this day!

Robert Baldock is the MD of Clustre – The Innovation Brokers