The 8 ways to disrupt traditional businesses and steal markets

Photo: Carl Court/Getty Images

Disrupting an established industry or business is becoming a type of business model. All you need is a better way to provide goods and services.

Of course, some startups have business models which would have been impossible in the pre-digital era. Others exploit inefficiencies in existing industries, sometimes challenging incumbents in almost monopoly positions or introducing order into previously fragmented markets.

Think iTunes, Uber and Airbnb as prime examples.

And now Australian research by the University of Sydney Business School and Capgemini, working as the Australian Digital Transformation Lab, has identified eight different types of disruption.

The study, “Digital Disruptive Intermediaries; finding new digital opportunities by disrupting established business models”, looks at the ways in which new operators are disrupting the Australian business landscape.

Although disruption is often something which happens fast, the process often takes a while but still creeps up on the incumbent.

“More often than not, people in established companies are aware of emerging technologies and how these may impact on their organisations,” says Kai Riemer, a University of Sydney Business School Associate Professor.

“However, due to conventional business structures and the evolving market conditions that foster disruption, response to these changes can be slow and difficult to manage.”

In a large company, it is easier to miss something that initially appears insignificant against the current understanding of the market.

What this means, says the report, is that disruption might already be happening in your market even if it is too small to have a real impact yet.

These are the eight different archetypes, what the researchers call digital disruptive intermediaries, and the ways in which they innovate and disrupt various markets:

  • Digital Stores They offer comprehensive digital stores to provide online one-stop shops. They are one of the oldest and most well-established groups of digital intermediaries. Examples are Amazon and Expedia.
  • Content Hubs disrupt the media industry and change the ways in which consumers interact with media services. Examples include iTunes and Netflix and more recently, in Australia, Presto and Stan.
  • Sharing Hubs enable the accumulation of user-generated content which threatens traditional mass media. Examples include Flickr and YouTube.
  • Promoters introduce price transparency and take on the role of channeling price conscious customers to the best offerings. An example is myshopping.com.au.
  • Aggregators allow customers to easily compare information-rich products in fragmented markets. They are essentially product catalogues of retailers. They act as intermediaries between those customers who are searching and comparing products and often smaller retailers in a variety of sectors. Examples include iSelect.com.au and Lasoo.
  • Discriminators are built around customer opinions and reviews. They disrupt established ways of defining quality, particularly in service markets. A major disruptive force, they rank products and services using a voting mechanisms or algorithms. Examples include TripAdvisor.
  • Crowd Sourcers gather customers to source services or suppliers via a digital platforms in a way that’s straight forward, leveling the playing field between large and small suppliers. Examples include DesignCrowd and Kickstarter.
  • Matchers reorganise the allocation of demand and supply in formerly monopolised markets. For customers, they offer a way of finding the right provider of a service at the right time and at the right price. For suppliers, they are a way of securing business. Examples include Airbnb and Uber.

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