My life is getting disrupted now, so I'm rereading two of my favorite books for disruptors and startup entrepreneurs - Chris Heivly's Build The Fort: The Startup Community Builder's Field Guide and Clayton Christensen's The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. There are two sides to the disruptor coin. One group, the disruptors, is fighting to take something from the defenders.
I've worked for two of the world's most prominent and skilled defenders, M&M/Mars and Procter and Gamble. While taking share from these behemoth consumer packaged goods (CPG) companies is difficult, it is not impossible because some technology and marketing changes favor usurpers. Never underestimate the power of compound interest. Large companies with well-established brands have more brand awareness (the money in my compound interest analogy) than startups looking to disrupt.
Since my life is being disrupted by forces potentially much more powerful than mine, rereading and writing about how disruptors can win despite the odds against them gives me hope. So please use the links below to discover how your company or personal brand can disrupt something or some company bigger than you are now. And have a great weekend.
Martin (martin (at) WTE.net)
In The Startup Factor, the great startup incubator run by Chris Heivly and Dave Neal, sitting down and reading books wasn't something Phil Buckley and I saw happening. Reading books such as Chris' Build the Fort and Clayton Christensen's The Innovator's Dilemma: When New Technologies Cause Great Firms may be the best way to turn your entrepreneurial dreams into reality. Here's what I learned from two books I reread and refer to so much that I owe both authors royalties.
Childhood memories of building forts with friends provided my first lesson as a marketer and writer. Building forts is an expected, if not universal, childhood memory. By tapping our collective unconscious, Chris wraps his lessons for startup entrepreneurs in the warmth and simplicity of those memories.
Chris' book also reminded me of a marketing lesson I learned at one of those behemoths I mentioned - people buy with emotion and justify those decisions with facts, logic, and convenient truth. People are, for the most part, risk-averse. So when selling anything new, it's best to find a comfortable blanket, a universal analogy such as building forts, to reduce the shock of the unknown, and to make new ideas feel like natural extensions of our beliefs.
My startup experience reinforced a lesson I overlooked. My false perception was venture capitalists are in the be gold risk everything business. Not so much, as it turns out, because VCs, just like everyone else, are better, leveraging bets into rewards. VCs look to trusted sources and then emulate, copy, or steal from those sources. While I'm certain exceptions to this rule exist on Sand Hill Road in the valley, any startup reading this post should steal Chris' "tap the collective nostalgic unconscious" and wrap their shock of the new pitch in something warm and fuzzy.
The team is another VC tipping point I needed to understand fully, and one Build The Fort spent quality time explaining. VC invests in teams more than products, Chris once explained to me as I sat on that comfortable couch in his office in the "American Underground" housed in a building where tobacco leafs used to dry. Any startup's product will need to evolve and change, so constructing a capable team while you map your resources and identify the ones you need is a crucial Build The Fort process for any startup.
WTE is working with several startups because creating MVPs is easier the more you do it. Being a startup is a lot like being a cancer patient. In both cases, you need to learn fast, adjust, and then make a bet, and time isn't on your side. The more I know about being a good cancer patient, the greater my life expectancy, which is valid for startups and MVPs.
The faster your idea can earn feedback from potential customers, the greater your new company's life expectancy. Neither groups, cancer patients nor startup entrepreneurs, can afford to take anything for granted, so Chris spends quality time discussing the Key Performance Indicators (KPIs) needed to refine, evolve, and measure results.
Everything is math these days, but Chris' book discusses how to take off rose-colored glasses and measure and see results to make the necessary complex changes every startup faces. But, of course, too much good money after bad and a startup is over, so understanding the real-world feedback MVPs provide is another Darwinian skill startups and cancer patients must master fast.
Before you ask your parents and friends for money to start the next Airbnb, Uber, or Amazon, read Build The Fort.
Build The Fort helps entrepreneurs learn how to play the startup game fast enough to survive, and The Innovator's Dilemma explains where and how disruptors should attack. I touched on many of these ideas in A Guide to Modern Ecommerce, but here are a few ways to disrupt the big boys:
Focus on Disruptive Innovations
Startups should use OPN (Other People's Networks) to use established tools and scale when possible. If that sounds like including someone on your team with social media and digital marketing expertise, you're on it. Don't take on a giant head-on carve off a niche or look to the long tail for leverage. The giant may not realize it is there, sleeping quietly in a corner. Instead, concentrate on creating disruptive technologies or business models that appeal to a niche or underserved segment of a market. While your innovations may start as inferior to current offerings in some ways, those tiny disruptions can provide other advantages such as lower cost, simplicity, convenience, or novel features. Over time, as your technology or business model improves, you will attract most customers, and be sure to ask them to join your disruptive cause.
Target Non-consumers or Underserved Market Segments
Targeting "non-customers" is a favorite tactic in another book I love - Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Established companies like my former employers focus on incremental improvements of existing products or services for their most profitable customers. However, the P&Gs and M&M/Mars of the world may need to pay attention to more profitable segments or non-consumers. Non-customers are people who either have never used the products or services from the big boys, have stopped using them, or are potential customers who may have considered the products or services but decided not to use them for various reasons. If you're a disruptive startup, FIND THOSE "various reasons," such as M&M/Mars' and P&G's lethargy on sustainability or Amazon's impersonal scale and attack where the fi fo fum giants won't see you coming. Read Malcolm Gladwell's David and Goliath: Underdogs, Misfits, and the Art of Battling Giants for more on attacking giants.
Startups and disruptors must counter the big guys' scale, distribution, and supply chain advantages with speed, passion, and furry. Your startup should learn to change early, often, and faster and faster. Find the virtual feedback loops missed by Goliath and use that knowledge to rapidly iterate your products and services based on customer feedback and pivot when ideas aren't working.
P&G realized their in-house R&D wasn't cutting it, so they created Connect and Develop to crowdsource product development worldwide. Connect and Develop is a brilliant idea with a flaw disruptors can use - P&G looks for products after internal market analysis. They look for what they know and believe, but, as the growing sustainability trend proves, those rose-colored glasses can make P&G blind to your sustainable house cleaning products or Mars Inc blind to Simply Gum creating a "sustainable" gum. Established companies want to refrain from promoting new products or technologies that might cannibalize their existing, profitable ones. Startups don't have this problem, so be willing to cannibalize yourself, innovate, and improve any product anytime.
Adopt a Long-Term Perspective
Disruptive innovations take time to gain traction and become profitable, so startups need to be patient, focus on long-term growth and success rather than short-term profits. Take victories where you can and bank what you're learning about Goliath and the other guy's "non-customers." Be prepared for resistance or dismissive attitudes from established players, who you don't want seeing the potential of the disruptive innovation until it's too late.
Disruption is a tricky game since one or two wrong moves and the giant steps on your disruptive startup like a bug. That's why I started this post with Build A Fort. Learn how to build your fort then create a disruptive strategy that attacks real or perceived weakness.
Use metrics to know if those "perceived" weaknesses and opportunities are real and exploitable or dry holes. Don't keep drilling. Be willing to cannibalize yourself and create virtual feedback loops that help your team move faster and faster more and more. Keep dodging the giant's foot and let us know if and how we or I can help.