The Root Cause of Disruption

Business news headlines tout new disrupters such as Uber and Airbnb for taking a large bite out of established stalwarts in the transportation and hospitality industry. It is often considered that industries are disrupted by technological breakthroughs. That's not the case. The rise and success of disrupters is due principally to established businesses losing touch with their customer base, claims Alberto Brea, Executive Director, Engagement Planning at OgilvyOne.

Every industry that has been disrupted failed to look through the customer's lens and provide a level of service or quality that customers wanted or needed. As Amazon CEO Jeff Bezos pointed out in his annual letter to shareholders, customers are never satisfied even when they appear to be happy.

Amazon did not kill the retail industry, writes Brea. Retailers such as Sears, Macy's, JC Penney's and K-Mart are responsible for their own self destruction by living in the past, staffing stores with personnel who don't know much about what is being sold and resorting constantly to the lowest common denominator by constantly luring customers with sale after sale after sale.  

Brea points to Borders as another example of a company that did not have a long-term vision or appreciate the need to service its clientele. Did you know that Borders outsourced its online book sales to Amazon? Why would any company send its customers to its biggest competitor? Plus, Borders ranked 266 out of 922 companies in customer service. By comparison, Amazon just might be the most customer-focused company on the planet.

Netflix did not kill Blockbuster. Blockbuster alienated its customer base by charging excessive late fees.

Uber did not kill the taxi business. Taxi monopolies killed themselves with rude drivers, fare control and limited options.

Apple did not kill the music industry. Record manufacturers did it to themselves by requiring customers to buy albums. Apple knew that most customers only cared about a couple of songs on any give album, so it ate the music industry's lunch by allowing customers to buy songs one at a time for 99 cents.

Airbnb started because two guys in San Francisco could not afford the rent on their apartment. During a citywide convention where hotel rooms were scarce and extremely expensive, they developed a website to rent a room at their place at less cost than a hotel to convention goers.

Technology is not the reason for established businesses being disrupted and losing market share and relevance. Lack of focus on what customers truly want is the reason why disruption takes place. Are you constantly looking through the lens of your customers to make sure that you are not a victim of disruption?