Wednesday, Dec 8, 2021

Do You Want To Disrupt, Or Do You Want To Be Disrupted?

Trick question?

Which of the following companies have not disrupted their industry?

Warby-Parker. Starbucks. Airbnb. Dollar Shave Club. Uber. Wikipedia. Tesla.

Disruption has become a buzzword. The synonym in the minds of the public is technology. Warby-Parker is primarily an Ecommerce eyeglass company – no breakthrough technology there. Neither with Starbucks nor Dollar Shave Club. Nor with Wikipedia. That leaves the three favorites: Airbnb, Uber and Tesla.

The answer – depends on who you ask.

Had you asked Clayton Christenson, Harvard Professor of Business, who is most recognized for introducing the concept of disruption, he would have removed two of the companies from the list. Probably the first that come to mind when you mention disruption: Uber and Tesla.

Yes, according to Christenson, Uber and Tesla are not disrupters. In fact, he was quite distressed when early on, the application was applied to Uber.

However, if you ask Jean-Marie-Dru, CEO of the agency conglomerate TWBA Worldwide, he will include all those companies, even those without a shred of advanced technology.

Dru, too, became famous for introducing the concept of disruption primarily to the world of advertising and marketing.

Perhaps one way to explain: Christenson is strategically focused. Dru is tactically focused.

Christenson was as much interested, perhaps even more so, in the defensive posture established corporations should take in face of disrupters. He identified the vulnerability due to the lack of creative thinking created through the cemented cognitive biases of successful companies.

He explained why companies like Kodak are now lessons in how to fail magnificently.

But his strategic thinking also explains why Airbnb rattled the hospitality industry, why Warby-Parker is doing the same to the eyeglass industry, why Dollar Shave Club has put the fright in Gillette.

Christenson was ensconced – he died a short time ago – in the ivy halls of Harvard. The only battle he had to be concerned about was whether the Harvard Crimson Tide would win on the football field. He could sit back and see things from a broader perspective.

Dru, on the other hand, is an agency man, which means he eats, sleeps, breathes, lives in the cauldron of advertising wars. And do not be mistaken. The stakes are huge. Collectively, $408 billion will be spent in advertising media in 2021. Agencies feast very well on their fees and media commissions.

So Dru’s focus is on the now. Now does not mean tomorrow. It could be a year, two years, five years from now. But every step taken today is a tactical consideration. Market share is gained percentage point by percentage point. Dru’s view of disruption is solely and wholly results driven.

Christenson and Dru see the purpose of disruption very differently. But both agree that the process is the same.

Creative Thinking = Innovation = Disruption.

To grab hold of this thought, understand this. None of the ideas of companies I mentioned came from technology.

The ideas for them all came from the human mind. (No doubt, like yours.)

They came about through creative thinking. With some, technology made them feasible and scalable. But the idea came from creative thinking.

According to Dru, disruption is about uncovering the culturally embedded biases and conventions that shape standard approaches to business thinking and get in the way of clear, creative thinking.

The key to Dru’s approach is something I have mentioned previously. In today’s highly competitive market, it is difficult for a product to stand apart, to distinguish itself. Creating a USP is no longer sufficient. Competitive catch-up time has been shortened to practically nano.

Dru believes that you must explode out of the box with radical disruption that changes the contour of the industry.

As Richard Branson, who besides for starting Virgin Airline is sending rockets off to space, said about Dru’s version of disruption, “Disruption is all about risk-taking, trusting your intuition, and rejecting the way things are supposed to be.”

Let us look at Warby-Parker. One of the founders, co-CEO David Gilboa, had lost his eyeglasses while backpacking in Thailand. When he went to replace them, they cost $800-$600 more than his brand-new iPhone 3G, a multiprocessing computer.

So, why were they so expensive? There is a massive concentration of power wherein one company, Luxottica, owns most eyewear brands you can think of: Ray-Ban, Oakley, Oliver Peoples, Persol.

Luxottica also owns Sunglass Hut, LensCrafters, Pearle Vision, Target Optical, Sears Optical — a massive collection of more than 7,000 stores (compared to Walmart, with only 5,000). Luxottica has exclusive licensing deals with dozens of luxury lifestyle brands — Chanel, Ralph Lauren and Versace — and they also own EyeMed, the second largest vision insurance provider in the United States. They power vision insurance for Aetna.

Put simply, Luxottica and its largest competitor, Safilo (Gucci, Fendi and Dior), control the industry: the doctors, the stores, the glasses. They markup prices however they want, and we are stuck with the pricing regardless of age, taste, or income.

Obviously, you may not like the price you see for your glasses, but you have little choice if you want to see.

Dru’s culturally embedded bias applies to the prescription eyeglass industry: Glasses are a functional, if not a medical, necessity. We put them in the league of fillings and braces. Are the costs warranted? Not for me to say, but the high costs are embedded in our thought process. We need to see, so we pay the price. It is a cultural cognitive bias.

It was the creative thinking of the founders of Warby-Parker that attacked this cognitive bias, changing the perspective of how glasses should be perceived.

Warby-Parkers sees prescription eyeglasses not merely as a medical function, but as a fashion accessory. And, just as you change your accessories depending on your mood, or what you are wearing, or where you will be, why not be able to do the same with your eyeglasses?

Creative Thinking – prescription eyeglasses as an accessory. “It boils down to our idea that glasses should be an accessory the same way shoes or bags are accessories,” Gilboa explains. “You should own multiple pairs…should fit them to your mood or your style. After all, they are the only thing you wear on your face. What could be more expressive than that?”

Creative Thinking = Innovation. The first innovation – selling glasses online. Never been done before. How? Order five frames, have them sent to you, have five days to try and decide. (Within the Creative Thinking process is looking beyond the industry to other industries, such as Zappos, and applying their solutions.)

Second innovation – the founders looked deep into the process of manufacturing and distribution.  To avoid markups, Warby Parker designs product in-house. They sell directly to consumers via their website and later their brick and mortar stores. Most importantly, they order their own materials (like acetate) from Italy and then manufacture frames at the same Chinese factories as their high-end competitors. They trimmed all the additional margins that blow up prices. “We built an independent, vertically-integrated brand that avoids unnecessary markups. Basically, we do everything ourselves,” Gilboa says.

An additional technological innovation came later: an app that enables you to see online how you look in the glasses.

Marketing innovation – free adjustments, no scratch guarantee, 30-day return or exchange. Cause Marketing – with every pair sold, a pair is given to the underprivileged. Over 1 million have been given away.

Creative Thinking = Innovation = Disruption.  Disruption – “We wanted to disrupt a system wherein glasses are marked-up hundreds of dollars for no value added. That may be a great deal for the industry, but it is terrible for the consumer. Glasses simply shouldn’t cost that much.” Warby-Parker prescription glasses range from $100 to $600.

For David Gilboa and his three partners, Creative Thinking = Innovation = Disruption proved its value: Started in 2010, it now has a $3 billion evaluation.

Ever hear of Encyclopedia Britannica? If you are old enough, you will probably remember the Britannica door-to-door salesman offering you the entire set for $1,000 or more. For over 200 years, Britannica salesmen offered a couple of hundred pounds of books, without a guarantee that the information could become outdated and not relevant before you read ten pounds worth.

Top Britannica management paid no heed to Wikipedia, an online all-volunteer encyclopedia lacking the heritage and prestige of Britannica, and, initially for many, lacking trust. But Wikipedia is updated frequently, it is free, and it is online – no heavy lifting.

After 244 years, Britannica sold its last volume in 2012.

From Dru’s perspective, Creative Thinking is the pathway to disruption. From Christenson’s perspective, Creative Thinking is critical for established companies that do not want to be disrupted. Both have been proven right.

So why did Clayton Christenson not think Uber or Tesla are disruptors, and how should his strategic thinking affect your strategic thinking? And is there room for innovation without disruption? Interesting questions that I will be discussing in the next column.

 

Interested in developing your creative thinking skills to grow your business? Maybe even disrupt your business category? Subscribe to my “Unleash Your Creative Thinking” free email course.  Email bullseyemarketing1@gmail.com, with “Creative Thinking” as the subject.

 

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