Disruption is a common theme when it comes to extremely successful businesses. The definition of disruption is to interrupt what is normal. In business terms, this means making a radical change in the industry. There are two primary reasons why a disruptive business model can turn into a huge success…but also be a huge risk:
1. A disruptive business breaks the laws of price and gross profit that are created by competition. If their is a competitive bid situation for an established product or service, the winner is the company willing to accept the lowest price. The higher the number of competitors, the lower the price will go. Once that number is set, the bar has been lowered in the market and customer expectations follow. When you disrupt what the industry perceives as normal for a given product or service, you will have no competition which means you forego the laws of competitive pricing. This allows you to charge a fair price and make a healthy gross profit.
2. Since you are changing what the industry perceives as normal, it is extremely scalable. If you gain traction you have the whole market to capture, as well as first mover advantage.
The major risk is that people can sometimes be weary of change. So, there is a chance the market will not accept your disruption. But, history has proven that if your change makes things better, faster, simpler, and more cost effective for the consumer, a little perseverance will produce big results.
For example, Uber set out to disrupt the cab industry and is gaining major traction. Although they are currently going head-to-head with the traditional cab industry and the Department of Labor, I would bet they will persevere and become one of the most successful disrupters in modern history. Next time you think about an opportunity, consider something extremely disruptive and see where it takes you.