Why Some Industries Are Ripe For Disruption

Disruption is becoming a common occurrence in business today as legacy institutions and longtime stalwarts in industries from transportation to groceries are being uprooted by changemakers such as Airbnb, Amazon and others. Disruption, as disconcerting as it may be, brings innovation—and no industry is completely safe from this type of change, as reported in an article on the MIT Sloan Management Review blog.

The authors—Megan Beck, CIO at OpenMatters and research fellow at SEI Center for Advanced Studies in Management at the Wharton School of Business, and Barry Libert, CEO of OpenMatters and a senior fellow at Wharton’s SEI Center—looked at patterns among business models and determined three major signals that could indicate an industry that is ripe for disruption. While the promotional products industry did not show up in this analysis, nor advertising and marketing in general, some industries that are top users of promotional products would identify with some of the signs below.

The story listed three industries the authors identified as most in danger of disruption: air travel (long security lines, frequent delays), real estate (high cost, complicated steps) and health care (stressful, time-consuming).

The first sign of industries at risk for disruption are those with significant regulatory burdens because, the authors say, they often suffer from complacency when it comes to the customer experience and improving operations. The second sign is when customers have to work at managing their costs. In other words, it’s the industries with cost models that are difficult for customers to understand—particularly those with middlemen between the product source and the customer.

The story gives the example of Tesla selling its cars directly to customers, rather than through car dealers, and mattress companies that sell direct instead of through retail stores. The third sign the article identifies is when customers’ experience is not positive, or even neutral. When customers complain or don’t seem delighted to work with a business, they will look for other channels through which to access the products and services. This scenario creates a prime opportunity for that industry to be disrupted.

Read the article here for more detail on disruption and how to prepare for it.

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