What killed classified advertising, a hugely lucrative money-maker for newspapers? It was Craig’s List and Kijiji. What killed the Yellow Pages? It was the internet. What killed Blockbuster Video? Not a cheaper movie rental service; it was Netflix. The internet has killed many industries so far—and it ain’t done yet.
“Category killers” and disruptive technologies are frequently invented by someone from outside of the industry. Why? Well, they just don’t know any better. They don’t know the rules to your industry. And they don’t care!
Here’s the key point: disruptive technologies are never about incremental improvements, but rather orders of magnitude. They are after delivering the same product or service, but in a different way and using different channels. We used to do it that way; now, we do it this way. It’s free enterprise at work.
As Henry Ford famously said: “If I had asked my customers what they wanted, they would have said a faster horse.” Instead, he created the auto industry.
Some things to note about “category killers”:
ITEM 1 – They typically start out as new technologies. The technology is frequently not recognized as a threat; in fact, it is frequently seen as quirky, strange, amusing, a toy, and simply not to be taken seriously. This is the dangerous part for many businesses: derision of what’s coming coupled with re-doubling your traditional marketing efforts won’t help you. It will just bleed you.
ITEM 2 – For this reason, “category killers” seem to come out of left-field. They haven’t actually, it’s just that most of the industry has not been paying attention or has blown off the idea as trivial.
ITEM 3 – On at least two occasions in recent memory, the technology killed the very companies that gave birth to that technology. Kodak invented the digital camera in 1975 and then did not do much with it. Rather than taking advantage of this huge technological leap, which had the potential to make Kodak first in the digital camera market, they fiddled with it. Why? Because they thought it would hurt their film business. It did—but not in the way they thought.
ITEM 4 – When there is a paradigm shift, everyone in that industry goes back to zero. In other words, you lose much, if not all, of your competitive advantages. Many of the old rules of the business no longer apply. And you cannot put the genie back in the bottle, so-to-speak. It’s out there.
ITEM 5 – The bigger the company, the bigger the threat of a “category killer.” And, the longer it takes to get your head around the change. It’s the proverbial turning a battleship around in a bathtub, coupled with layers of management fighting to preserve their own jobs. Blockbuster Video had at least a decade to set themselves up as the Number 2 provider to Netflicks. A billion-dollar company with more than 3,300 stores failed to change to a new business model in a decade.
How do you prevent “category killers” from leveling your business?
You pay attention. You keep up on technology and what is coming down the proverbial pipe. You keep on top of your industry. What part of what you do can be automated with an app or cloud software? You make sure that you talk to teenagers to see what they are doing and how they are doing it. You keep an open mind. And, most important, you ask yourself the question: How could this change, hurt or kill my business, or even industry? What am I missing here?