AirBnb, Uber and Tesla have gotten tremendous attention and success for creating a disruptive strategy within their markets. Each of them have used unique business models to revolutionize experience and open doors to massive growth. In today's competitive markets, companies are fascinated with disruption.
When you are considering entering a new market, you may be looking for your way to disrupt and create your competitive advantage. But disruption isn't always the answer -- it's only half of the puzzle. The other half is a non-disruptive creation that is based on value.
Creating a truly disruptive company in an existing space is incredibly difficult. Disruption takes direct aim at a market filled with large companies with massive power. These established players have market awareness and plenty of resources.
Developing new technologies to create disruption is not trivial. The right business model that creates cash flow takes time and a bit of luck. Most companies will bleed money before finding the right mix of technology and business model when focused on disruption.
In my years of being a serial entrepreneur, I have felt the pain of "disruption" in spending time and money looking for a new way. After years of disappointment, I found a better way to look at the challenge of growth.
Innovate Through Value Instead of Disruption
Disruption may not be the answer to your growth. In fact, more than half of growth opportunities would be considered non-disruptive. This is best described as creating a value-innovation where you seek differentiation and low-cost. This term has been coined by the co-authors of international best sellers, Blue Ocean Shift and Blue Ocean Strategy, W. Chan Kim and Renee Mauborgne. Value-innovation unlocks markets.
Let's look at how Square made their entrance into the establish market of payments with known players -- Visa, MasterCard and American Express. Square didn't create disruption. They looked for a sector of the market that was not accepting credit cards. Just in America, Square discovered that nearly 13 million small business did not accept credit cards -- but their customers wished they did. Using the concept of value-innovation, Square created a system for mobile payments that let them unlock an ocean of non-customers.
One huge benefit to value-innovation is the avoidance of confrontation. Why take on the big companies when you can find an opportunity for non-disruptive growth?
Smaller brands have an advantage available to them that make them more adept to change and disruption. But I have noticed value-innovation is actually a better strategic approach for me to develop my leadership consulting and coaching business than looking for disruption.
Andrew Obrecht, partner of YYC/YEG Cycle, shared three ways in which he used the concept of value-innovation to grow his gym since opening in 2013.
1. Creating Community
Most companies are customer-focused, and that leads to transactions if you are lucky. However, Obrecht began by creating an offer that banded other like-minded people into a "community." They refer to themselves as the "biker gang" -- not the leather-wearing kind, but the biking tights kind. When you create community, your business growth becomes driven by the desire to be part of the community by non-customers.
2. Being Socially Conscious
Value-innovation that connects to the greater good within the fabric of society has a profound vibe with non-customers. YYC/YEG Cycle does not offer free introductory classes. Instead, Obrecht said, "we have opted for charging a set fee for those classes with 100 percent of that fee donated to local community projects." The money is donated to projects nominated by the biker gang through a vote each quarter. They have given away more than $500,000 in the last four years. This does more than just give money to the community -- it actually deepens the drive and connection that everyone has to the brand.
3. Focusing on Superior Service
Customer service is a necessary part of as businesses. Most companies aim to solve the problem. It is a bonus if employees do it with a smile. Obrecht set out to go beyond just servicing the biker gang. Every interaction between staff, team members, the biker gang, and potential customers is as though they are being cared for by a "best friend." The best-friend level of service is a loyalty goal and tracked weekly.
Obrecht said that his mission was not to create a business. He set out to create positive change for the community, which in turn has created a brand that continues to grow with ease.
Mauborgne, Professor of Strategy at INSEAD, "The best way to beat the competition is to stop trying to beat the competition. The more companies strive to outpace rivals, the more they let the competition set their strategic agenda. The result is imitative, not innovative, approaches to the market."