Speaking of the Market

Disruption Theory and Phenomenal Growth

Theories when backed with evidence have great mental appeal.

There is a theory, speaking of the market, that explains how and why phenomenal growth is possible for some in the market place. More specifically, why products as diverse as the Model T Ford, Sony’s Pocket Radio, the personal computer and even sites like Digg have entered the market place enjoying stratospheric growth.

Note This is about speaking of the market for public speakers. This is a speech topic. You may however enjoy it for the business value. If so, please read the 2003 best selling book mentioned below. It is a fascinating and powerful theory.

This same theory explains why U-tube, and My Space, and cardiac catheterization attained celestial growth. This theory also explains why a former giant like Bethlehem Steel was upset by smaller upstart mini-mills. It also explains why even former disruptive services and businesses like K-Mart have lost their market share.

The evidence proving this theory will also give a glimpse of the future. Understanding the dynamics can not only make it possible to watch for and pick winners, it can create a blue print for creating the same success within what ever projects we choose to undertake.

If the past repeats it’s self, it also will explain how current giants will become tomorrow's dinosaurs.

Speaking of the Market Disruption Theory

The market theory is called the Disruption Theory of how markets work. The basic premise is that when a product is framed as a disruption and that product competes with non-consumption it is destined to see growth into the stratosphere.

To understand the theory, look at the pattern that emerges from the historical market disruptor's.

Note If you will be speaking of the market, marketing or related topics, be sure to list anecdotal evidence that will be readily known.

Four Factors

1. The customer base has a job to do. However they lack the skill, money, time, or a simple solution is beyond their reach.

2. They will look to the disruption (a product, procedure, or service) as the only choice. It is either the disruption or nothing at all. Thus the expression of competing with non-consumption.

Here is the best part. The disruption does not need to be as good as other products available at higher prices. It is easy to please this customer initially. However future generations need to improve.

Digg for instance created algorithms that compensated for the groups that tried to artificially increase ranking of their posts.

3. The disruption makes consumption convenient, easy, and fool proof. Remember, nothing is fool proof to a talented fool. The disruption does need to make it easy to go over this hurdle. Thus people with less experience, knowledge, and money can start using or consuming the disruption.

4. The disruption creates a whole new value channel or value network. The new customers start consuming through new channels and use the product in new ways.

As an example, the solid state TV which disrupted the old tube type TV’s was sold through a new marketing disruption known as K-Mart. Many or the old TV stores went out of business. They didn’t perceive the threat till they had lost their market share.

This is an over simplification of the theory. It does not discuss things like new entry disruptions and low end disruptions.

Historical Disruption Examples

• The Big Steel Mills by the Mini mills
• Sony Walkman
• VCR’s
• Cannons Desk Top Photocopier
• Honda, Toyota, and Nissan created a second wave disruption of the auto industry.

What does the future hold?

All disruptions end up becoming commodities as others try to copy their success. Here is the beauty of this theory. With commoditization comes de-commoditization. So it is possible to create consumption on both those entering and exiting the markets.

A prime example of this is Castro Tool and Machine. This small company makes moc bombs and land mines. They are made to be exactly like the land mines and bombs made from around the world. The purpose: To train people how to diffuse the real ones. The commodity has become decommoditized and profits are being made from taking it apart.

The best case scenario if you should create a market disruption, sell it to one of the big guns, take the money and run. Chances are they will be coming after you soon anyway.

Want More Information?

If you want more information for speaking of the market and market disruptions then check out the book The Innovators Solution by Clayton Christensen.

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Other Links To Help You Manage Your Mind

Recal Tonight’s Dream Tomorrow Morning and other aspects of the sleeping mind. They will make for a great speech topic or just water cooler conversation.

Master Reading Comprehension with a simple tutorial. Learn it or speak about it. Either way it will improve your life or conversation.

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