Disruptors rule by constant upgrades, deep knowledge
What makes a successful disruptive business strategy?
Ford Motor Company sold about three million vehicles last year. Tesla, the electric car-maker, has just caught up with Ford's market capitalisation.
Guess how many vehicles Tesla sold last year? All of 76,000.
This is the new world - one that belongs to disruptors.
From Apple 10 to 15 years ago to Amazon and Tesla, the disruption juggernaut has carried on.
It has laid low many conventional companies (think Nokia), shifted technology narratives (think Kodak), shaken up skills and attitudes and more significantly, acquired mammoth scale almost unnoticed.
What makes a successful disruptive strategy? What common features do we see in companies or products that have gone on to dominate their categories and to even rule our daily lives?
SELF-SELLING PRODUCTS AND SERVICES
The new age products and services were designed to be self-explanatory and therefore marketed themselves. The underlying disruption did not have to be explained (electric cars, touchscreen phones, online book sales).
The innovations were so glaring, the teaching and familiarisation process for customers was either minimum or obvious. The concepts were simple, the benefits self-evident and the new learning needs minimal.
When these products or services were introduced, they focused on getting some early customers, which probably involved marketing dollars. After that phase, the Internet, the novelty of the ideas and their simplicity did the rest of the marketing.
CONTINUAL IMPROVEMENT, ADJACENCIES, UPGRADES
Every successful player in the disruption game has mounted regularly additional services.
Amazon kept adding new product categories and even media and entertainment offerings. Google has deployed the "adjacency" model expertly by expanding services from search to mail, maps, docs, Chrome, YouTube, Google Translate and more.
Facebook has extended itself to messaging, customising feed preferences, private scrapbook of photos and more. Apple's iOS renews itself more times than you can count.
These companies roll in new changes constantly as new user insights and analytics throw up opportunities. And they can easily abandon old versions.
NEW SERVICES OR PRODUCTS, HENCE ABILITY TO CHARGE NEW PRICES
When Apple introduced the iPod more than a decade ago, it was priced at around US$399 (S$540).
It was rumoured that it cost the company under US$30 to produce each iPod. The advantage of new unknown products or services is the pricing power.
Google AdWords and Facebook advertising have pricing plans similar to none, as their services are unique. That is the cash engine for these two companies.
Electric vehicles are priced almost twice as much as conventional vehicles, partly due to cost differentials - but the price differential is more than the cost differential. Over time, the gap may close, but the advantage can be sustained for a long time, with improvised features.
OUTSTANDING USER EXPERIENCES
Google Chrome usurped the dominance in the Web browser category from Internet Explorer or Safari, thanks to its outstanding user interface.
It has put user experience on top of everything, rather than going on a technical overdrive.
The popularity of Instagram is attributed to its simple user interface exploiting visual appeal and instant enjoyment to the full.
In contrast, many Web portals, including airline booking pages, are clumsy with too many steps and counter-intuitive algorithms.
Not long ago, the Iridium phone and Palm organiser suffered from inconvenient features and never took off. Thus, it takes effort to keep it simple and user friendly, and the disruptors know this well.
Consumption in the Third World has risen faster in the past decade.
In order for companies to stay in the hunt, content and language have been substantially localised.
But localising content or features is not mere translation. It goes deeper into culture, habits, attitudes, preferences and lifestyles.
As these companies get more innovative and keep a steady lead ahead of others, their winning strategies will become the new normal to succeed as a new player.
Disruption will then become a core element of every company's strategy.
The writer is a business consultant. This article was published in The Business Times yesterday.