10 years ago the iPhone was introduced. Today companies still struggle to realise disruption comes from outsiders
In my opinion, the biggest mistake companies do these days, usually big companies, no matter their industry, private or public; is that when it comes to competition and threats to their future, they all tend to only look inside their own box, their own limits, never outside or beyond that, always looking what their neighbours are doing; those playing side by side and try to compete with that or even replicate it.
If there’s something we’ve been able to witness on and on again, in this era we are living in, is that game changers usually come from the outside, in most cases are underestimated, and they tend to take the industry they are getting in, by storm, leaving little room for the traditional players to catch up or innovate fast enough.
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mainly because at the beginning they are so disoriented by what’s going on, by the marketshare they are losing or by their own traditional practices that are so constrained to pickup, or in many cases, because the opportunity was so specific and well orchestrated that even with the resources it is almost impossible to catch up.
And in the anniversary of the iPhone, seems more than adequate to use it as a clear example for this, massive disruption that came from outside the mobile phone industry, provided outstanding innovation and was severely underestimated by the then leaders of the market. Do you remember Nokia, BlackBerry and Motorola before the iPhone? Where are they now?
These are comments made by the CEOs of two of those companies at the time:
“I don’t think that what we have seen so far (from Apple) is something that would any way necessitate us changing our thinking when it comes to openness, our software and business approach.” — Olli-Pekka Kallasvuo
“It’s kind of one more entrant into an already very busy space with lots of choice for consumers. But in terms of a sort of a sea-change for BlackBerry, I would think that’s overstating it” — Jim Balsillie
Moreover, Apple can be also used as another example for the same topic when but in a different industry, payments. After revolutionising and redefining SmartPhones, the iPhone gave Apple the opportunity to start disrupting other industries, in the case of payment they took advantage of their user-base and achieve a rapid adoption of ApplePay just after the launch, once again disrupting leaders of the market from which these type of innovation should be expected first. Companies like Square and PayPal that where innovators in their space, are now facing disruption not from another payment company, but from Apple.
PayPal, disrupted the digital payments landscape more than a decade ago, since then becoming a key reference in this area, and as other services appeared, PayPal remained a leader. They changed the way goods and services can be payed online, the way people digitally interact with money, and they way already into the digital wallet movement, before ApplePay.
Example #1: Non another payment company but a tech company that used their installed based (iPhone and now the Mac) to get into payments.
Furthermore, Tesla can be seen doing the same to the auto industry, again an outsider, that redefined the way people think about cars, shifting them from an static asset, to a ever evolving, feature-rich and updatable product, and even shifting the way they can be acquired, setting up fancy eye-popping stores or through online reservations before the car stars production. Think about it, beside a limited edition supercar of the likes of Ferrari or McLaren, when and why, normal customers had to put their names on waiting list to buy a car two years before its release?
BMW and Mercedes-Benz, both true innovators of their industry. These German titans are indeed, outstanding at that they do, usually reference to the highest levels of design, user experience and engineering; the companies that others in the industry trying to emulate or catch up with, are now fighting for their slice of the pie with a newcomer in the growing market of electric cars; yet another demonstration of the profound impact of external disruption
Just of the record, Tesla surpasses BMW to become the 4th most valuable car company in the world.
Example #2: Not another car company, a startup from from Silicon Valley, that ‘overnight’ changed the rules about how cars are made and look like, and that not even define itself as car company.
An to conclude the cycle I will get back at Apple, the definitive creators of trends that will still define our world for decades to come; however, here we have them, with iTunes, the product that catapulted them to where they are today alongside the iPod, not only revolutionising the music industry, but redefining the way we think about it, reshaping it to the point that a new one was created. Streaming services, in my opinion, the undeniable byproduct and evolution of what started with iTunes; yet apple is the one now catching up against Spotify.
The outsider became the leader, and although, Cupertino reacted accordingly launching Apple Music, and they are indeed boosting their paying customers quoter after quarter, the main question for me is should not Apple was innovative enough for the them to realise early enough that streaming was the next step, in a way they could avoid losing the leadership? Before than anyone else? Instead, they are now playing catch up against Spotify, but, do Spotify would exist the way we know it Apple would have reacted on time? Do Spotify even exist at all?
Example #3: Not another technology company, a startup looking to create a business model around legal distribution of music.
The are plenty of examples and the list is long enough, Amazon challenging the bluetooth speakers market with the Echo; the well-known story of Netflix taking over Blockbuster, Kodak and digital Cameras, and so on.
This will continue to happen, over and over again, industry after industry, no matter the place, no matter the technology; and that’s it is important for companies to acknowledge and accept. It’s evolution, and it’s human nature.
Don’t get comfortable, don’t settle , and never underestimate the underdogs, you never know if your company can become one of them, by one of them.
As this have been stated before, “everything that can be disrupted, will be disrupted”, to that I will add, “and if you don’t act because you think it won’t happen to you, just wait and see, it’s just a matter of time” so please don’t wait.