A new breed of brands is revolutionizing with disruption
Disruption brands are modern-day Robin Hoods, taking from the rich incumbents who’ve grown complacent in their dominance, and provided a breath of fresh air to consumers looking for services that empathise with them. Kodak was once a giant in photography, but failed to spot digital. Nokia supplied the world with mobile phones until Apple announced the iPhone. Banking institutions around their world struggle to figure out what to do with their branches while PayPal steals customers daily online.
I like the word “Disruption”; it’s got more bite than its worn out big brother – innovation. Disruption is brave , it isn’t about doing things a bit better, it’s about redefining the conventions of your industry with game-changing ideas and brands. The disruptors brim with creativity, a strong sense of purpose, they love their customers and speak with a fresh expression. These new comers are reinventing business, making exciting leaps forward and showing the establishment that their way of doing things no longer applies.
As I write there’s a lot of media attention around the word, but the concept isn’t new. Disruption was formally brought to light by Clayton Christen, a Harvard Business School Professor in his 1997 book, “The innovator’s dilemma” He used the term “Disruptive Innovation” to describe ideas that create new markets. They often exploit new technologies, rethink existing technology in different ways or develop new business models to meet the unmet needs of customers.
What does disruption mean today?
Christen’s description still applies, but he couldn’t possibly foresee how his concept would flourish. The combination of easy to acquire technology, the dogma of established industry leaders and the enthusiasm from consumers has made room for new brands that are determined, genuine and exciting.
Richard Branson, the godfather of disruption, once said, “Disruption is all about risk-taking, trusting your intuition, and rejecting the way things are supposed to be. Disruption goes way beyond advertising, it forces you to think about where you want your brand to go and how to get there.” Even now the sixty year old, billionaire “upstart” is rewriting the rules. Virgin America’s cheeky branding approach makes other airlines look self-important and out of touch.
Many of these brands rise so quickly that it seems like they came from nowhere. Think of Airbnb, Uber and PayPal. We can all remember when these brands seemed simply new, but now they seem like the new establishment. It’s no surprise to hear people who would have once stayed at the W to espouse the virtues of ‘going local’ with an Airbnb apartment. Behind these front runners of the disruptor movement, are many more relatively unheard of brands already shaking things up in their category.
In this article I’ll explain how established businesses fall victim to disruption, and spotlight some disruptors you may not have heard of, who could be the business successes of tomorrow…
The new reality of business
Disruption has surfaced into sharp focus because of the exponential pace of change. Technology is freeing companies to make great leaps forward. Business courses are rushing to update their curricula to keep abreast of industry developments. The job tenure for the CEO of a Fortune 500 company has halved from the average ten years in 2000, to less than five years, as companies seek leaders with the ability to steer them through the next big thing.
There’s probably never been a better time for entrepreneurs, anything seems possible. So more young companies are threatening the status quo with new business models, useful products, strong customer focus and emotive branding. Their ideas provide such a breath of fresh air, that they are quickly adopted, not just changing opinion of how things can be done, but breaking down geographical boundaries as they go global, often changing the industry to the extent that there’s no going back.
The incumbent’s dilemma
Clayton Christensen described the “innovator’s dilemma” as the choice an established business has, between pursuing what they’ve always done, but just a bit better. Or throw out the rule book and embrace new ways to open up new markets. As we know this is a difficult choice, with many leaders opting for an ‘if it ain’t broke don’t fix it’ strategy. But what causes this reluctance to change?
Goliath meet David
When a business with a disruptive idea first comes forward it’s in no position to dictate terms. The idea is new, unheard of, it takes time to understand it, and the products are often basic without the refinement - that comes later. Consequently, they enter the bottom of the market with a low price to match.
The incumbents in the industry are often preoccupied with their larger operation, and the status that comes with it. They’re indifferent to ‘small time’ competition who are unproven in a sector that they dictate. The hunger of a start-up is an energy they’ve long forgotten, until that hunger starts to steal customers, that would normally be theirs. Many established businesses suffer from an attitude of superiority allowing disruptors to slip under the radar and take their crown.
Innovating their way into a corner
Some companies focus on the customer segment that historically helped them achieve their success, often the more demanding customers willing to buy more and pay more for their service. This drives an incremental innovation process intended to add more value over time. Consequently, products become evolved to a point that they are too complicated and surpass the customer’s interest or needs.
Meanwhile the disruptors operating at the bottom end of the market are providing a product that was otherwise unavailable to a customer base who value a no-nonsense solution to their needs.
Evo, a brand Mission helped to launch, observed the growth in the fitness centre market. Seeing established chains move into, bigger out of town locations to make space for more enticing facilities such as baby crèche. But many members found themselves reluctantly paying for these features which they didn’t need.
Evo entered the market with small, neighbourhood centres and a back to basics approach. The company now has branches across northern Europe with a turnover of NOK 120 million . As their competition became more bloated, Evo used a disruptive strategy to meet the needs of a growing market of dissatisfied customers, with a brand that conveys a simple, easy solution.
“This is the way we’ve always done it”
One of the downsides of success is that the bigger you become the harder it is to enter smaller, emerging markets. Despite deeper pockets and a larger work force, the culture of a company changes as it grows. They typically think about leveraging the assets they’ve built over the years, rather than creating brand new ones. The organization becomes habitual and a comfort with the status quo comes settles in.
Independent thinking is frowned upon, “that’s not the way we do things” becomes a knee jerk reaction. It leads to a blinkered culture unable to accept new ideas and incapable of confronting the change looming on the horizon. When companies, like Coca-Cola, experience this they buy the disruptor, in their case they acquired Innocent Drinks, but not all companies can afford to do this.
Too slow to react
For what start-ups lack in resources they make up for in agility. Their costs are lower involving less risk. They’re not always obliged to research ideas to death before they make a move, leaving managers to move forward often on gut feeling. Established companies on the other hand, fear they will shoot themselves in the foot if they make a step in the wrong direction, disappointing investors and sacrificing profits. And yet with the pace of change so significant, standing still could be the worst strategy.
A superior attitude, incremental innovation, self-satisfaction and slow reactions are traits that many business need to wake up to, if they want to stay in the game that they probably invented.
What makes disruption brands better?
Despite the proliferation of disruption brands across every market, there are some attributes that are common to all. They’re not always based on a killer app, they’re sometimes established companies attempting a brave new direction, and sometimes the product they’re promoting has been in use for decades. Here are some of the characteristics that help them get ahead.
Driven by purpose
Disruption brands are often founded by Millennials, born in the eighties and coming into adulthood around 2000, where a desire to make a mark on the world, and the start of a new century combined to form a distinctly idealistic outlook. They’re globally aware, civic-minded and unimpressed by institutions. Millennials were born with technology at their fingertips and tend to be strong networkers.
Characteristically they have strong expectations of the workplace and when they can’t find fulfilment they tend to think they can do better. This culminates in a strong sense of purpose, where a strong desire to improve a situation they find unsatisfactory, leads to the birth of a distinctive business idea created by people with the passion to bring it to life.
A single-minded idea
Acceptance of the status quo comes hard to the disruptor’s philosophy. They’re not rebels, they’re more pragmatic than that, but when they see a solution to a situation they can improve, they pursue it. There ideas are often socially minded, they think about making the consumer situation better and reverse engineer the business from there.
Because they’re often underfunded, Disruptors have to hone their idea into something focused and single-minded, usually targeting the lower end of the market to build volume. The combination of a social benefit that is simple, useful and easy to buy in to, stands out from legacy brands and quickly gains a following.
Technology savvy
Disruptive brands tend to have a high involvement with technology, often using a new technology to do something simpler and more effective than before. The writing was definitely on the wall for Netflix, who started out by posting DVD’s through the mail to your door. They saw change coming and took the smart move to reinvent their business model, streaming content on demand which rebooted the whole venture. Now they are perceived as the most progressive force in content delivery.
The use of technology extends into marketing. Big data, social networks and new platforms enable disruptors to connect with customers in new ways on a global scale. Social media, blogs and mobile technologies replace traditional media allowing the customer to often engage with the brand directly, building a stronger bond.
Emotive Expression
When companies began to consciously brand themselves they built on the heraldic system, using icons of strength to suggest their power. Look at Barclays for instance, founded 300 years ago and still represented by an Eagle today, which up until recently was contained within a shield. As corporate branding as we know it gained momentum in the sixties, companies continued to define themselves with strength and professionalism, you could trust them because they projected authority.
But the internet put brands directly in touch with people. Brands could no longer rely on reason and persuasion. They needed to become more approachable, inspiring and emotive. It’s no accident that meta brands like AT&T, BA, BMW, GE, ING, and UPS, all switched to acronyms to make them feel more accessible. SAS is far easier to connect with than Scandinavian - Airline - Systems.
This trend has become more pronounced with the advent of disruptor brands. Names like Blab, Grabble, Unmade, and Zeek, reject any attempts to feel authoritative, they’re short, distinct and slightly irreverent, indicative of the more informal expression that Disruptor brands communicate with. Their brand expressions are simple, colourful, easy and approachable, ready to welcome like-minded people to their cause.
Five disruptors that could change the game
Some of the brands I mentioned earlier have become the definition of what a disruptor brand is, and how it behaves. But they are the most visible ones and their stories are already well covered.
Disruption isn’t just happening in the tech sector, it’s happening in nearly every sector from toothpaste (Hello), to virtual reality (Improbable). In this article I wanted to put the spotlight on some disruptor brands that are on the rise. They all have certain things in common: they have a strong purpose, they spotted opportunities, they adopted new business models and connected with customers in new ways. You may not have heard of them yet, but keep your eyes and ears open, they are coming to disrupt a market near you soon…
Everlane - empathizing with the customer
“Your designer clothes sell for eight times what they cost to make”. This is a claim by Michael Preysaman, a true disruptor and former venture capitalist, who became dissatisfied with the cost of quality, classic fashion, so he founded Everlane as a response. “We just never understood why the most beautiful and simple products needed to cost so much. We’ve just cut out the middlemen so we can take smaller margins without sacrificing on quality.”
He and his team made up of people from such diverse backgrounds as Google, Pentagram and the Gap worked closely with factories to secure quality. Whilst they reduced their margins by selling the product directly through their own website without any traditional retail presence. “We constantly challenge the status quo. Nothing is worse than complacency, and as a brand our culture is to dissect every single decision we make at every level of the company.”
This kind of transparency can be felt in the design of their site. It eschews the escapist glamour imagery of most fashion brands, for a back to basic simplicity, using natural models to present the clothes in a clean, white spacious site. And notably shows the traditional retail price to illustrate their commitment to affordability. As I write they are asking people outside of the US if they'd like Everlane to distribute to them. The top forty two countries will be trialed over the next month.
Atom Bank - Improving the customer experience
Atom Bank is England's first bank built solely for mobile devices. It is a pure mobile app built on a gaming platform, which delivers the speed and response time that customers demand. The PIN codes have been replaced by voice recognition and selfies for authorization and access. In addition, the user interface can be redesigned by the individual user. With lower physical expenses, they can keep prices lower than traditional banks.
These are just some of the features that Atom Bank has factored into its service in its quest to be as customer-centric as possible. “Nobody cares about banks, they just care about banking,” founder Anthony Thompson told Marketing Week, “They want to get what they need quickly, easily and painlessly, and if you can make it a great experience, so much the better.”
Atom Bank only launched this year (2016), but is already worth £150 million. I particularly like the line on the app that says “How to complain,” it demonstrates a bank that is accesible and openly willing to iterate in the interest of service. UK banks have been through a tough time since the economic crash, and have to work hard to earn back a loss of public trust, maybe they could learn a thing or two from Atom.
Deliveroo - Spotting the gap
There’s a saying that goes something like, “you should start the business you wish existed.” Will Shu a former investment banker, took this to heart. Shu couldn’t get the kind of quality of food he wanted on those nights when he had to work late, (we’ve all been there). So he set about creating in his words, ‘the best food delivery service in the world.’
Deliveroo,is a company that delivers food from high-end restaurants, who traditionally don’t do takeaway, to people at home or at work who order through the Deliveroo app. They deliver quickly via environmentally friendly bicycles, scooters and even runners. The company now delivers to 60 cites in: France, Italy, Belgium, Spain, Germany, Australia, Hong Kong, Singapore, UAE, Ireland and the UK, where their vivid uniform designs can be seen adding to the hustle and bustle of the street.
Disruptors often see their ideas catching on quickly. Since spotting this gap three years ago, Deliveroo has averaged around 25% month-on-month growth.
Under Armour – the underdog spirit
Some disruptors are not just dissatisfied with the incumbents in their field, they’re fueled by a strong drive to compete and surpass them. Under Armor have pioneered technical fabrics for sportswear since the first t-shirt they sold twenty years ago, (not all disruptors are overnight sensations). In 1996 they made $17,000 in sales, this year they project sales of $5 billion.
Despite being in business for twenty years they hold on to an fierce underdog mentality that fuels their determination to compete. So much so that “Nike” is a word that cannot be mentioned within the walls of corporate HQ. It’s an attitude that must serve them well, last year they overtook Adidas to become the second biggest sportswear brand in the U.S.
They don’t just walk the walk - they talk the talk, with band language like “Waging the war on cotton” and “Mother Nature made it. We made it better.” It’s a fighting spirit that connects with performance driven athletes that want the best. If I was Nike I’d be looking over my shoulder.
Bloom and Wild – sometimes old is the new – new
‘Saying it with flowers’ has been a long held tradition for many of us looking to show our gratitude. But as work has become more than nine to five who’s got time to go to the florist, and will your loved one be at home to receive this delicate gift? Bloom and Wild figured out the logistics and have probably given Interflora something to seriously think about.
The company cuts and ships flowers in 30 seconds, beautifully presented in award-winning packaging, that fits through your letterbox. This means the flowers are ready and waiting to surprise, when the door is opened. Bloom and Wild also team up with interior designers to make their bouquets compliment contemporary decorative tastes, such as Jordan and Russel of ‘2 Lovely Gays’ fame, these are definitely not gladioli for grandma. The firm has recently secured £2.5 million growth capital.
Strong branding is business critical
All these disruptors recognize that strong brand design is a business critical factor for success. They’re coming to a market with something unproven, often without a name. The majority of them are digital and have little interaction with customers, so the few touchpoints they use to build engagement are vital to their success. Strong branding helps them in several ways:
It differentiates from incumbents
It communicates an unfamiliar concept
It builds trust for an unknown entity
It can attract investment at the right time
It compels customers to act
It builds a dialogue with followers
It builds momentum and helps to get a foothold in the market
Design makes an idea tangible, understandable and desirable, without it a game changing idea will become wishful thinking. Disruptors are using their brands to transform customer experiences, invigorating the marketing landscape and making ardent attempts to change our world for the better, they're driving progress which should be an inspiration to all of us.
Main Image courtesy of Wikiimages.
