It was really fun to be part of CNBC’s advisory panel to choose the most disruptive 50 companies of the year. The full list for 2014 can be found at this link. Some of the companies reflect trends that I think will be fundamentally reshaping the way business is done in the coming years, some of which I featured in The End of Competitive Advantage.
Access to Assets, not ownership of assets. With the advent of inexpensive ways of linking potential users to potential assets, markets can be created where it would have been impossibly expensive or complex to operate before. Ownership of assets, therefore, becomes optional in more and more parts of the economy, wreaking havoc on our traditional understanding of barriers to entry. Uber, Quirky, LendingClub, Spotify, Rent the Runway, Fon, and AirBnB all have business models that help people who need assets connect with people who have them to offer – for a price.
Helping customers get ‘jobs’ done in an entirely new way. Most industries are the way they are because of some past constraint – something that they needed to create in order to deal with problems in their environments. With globalization and digitization to name just two forces for change, those constraints melt away and smart entrepreneurs can envision how to disintermediate or disrupt incumbents. On the Disruptor list for 2014 firms that exemplify capitalizing on the changing constraints in an industry are many. Motif investing allows even small investors to create sophisticated portfolios online, a process that used to require significant time and therefore was only available to major players. Aereo is confounding traditional broadcasters with a model that leverages a crack in the regulations keeping broadcasters where they are in the entertainment food chain. TransferWise is busy disintermediating the (expensive) foreign exchange services offered by banks by facilitating peer to peer foreign exchanges.
Leveraging the Power of collaboration. Our traditional view that companies were largely product-based and that innovations come from the R&D department definitely don’t hold for a lot of these disruptive players. Instead, they leverage collaborative capability to achieve their outputs, generally doing things that might never have been identified by traditional players. GitHub connects programmers to make version control for complex software easier and cheaper. Quirky makes it possible for inventors to get their ideas into products much faster than if one had to create a whole new company to do it. Kickstarter allows entrepreneurs to crowdsource their funding, without the need for venture capital funding.
Leveraging major technological advances. Of course, good old technology breakthroughs can also have disruptive effects on other companies. Moderna Therapeutics, for instance, is exploring the realm of programmable cells that can fight diseases themselves. PureStorage is taking on incumbents such as EMC in the data storage space by leveraging new technologies.
Taking advantage of business model trends. As constraints that held old industries in place crumble, new business models are both feasible and affordable. One such shift is the trend away from paying one-price for a product to paying a subscription for services that replace a product. Think what Netflix has done with streaming versus the owned-or-rented DVD. Zuora is a disruptor that has based their business model on making it easier for clients to manage subscriptions. WealthFront has capitalized on the idea that for many investors, the best bet is to trade on a portfolio of investments chosen by algorithms. The wealth managers and their so-called individually managed funds are out of that game. Yext (for Next Yellow Pages) allows advertisers to synchronize how their company is listed and found across many platforms with a single point of contact. Oscar is a company that capitalizes on the fact that health insurance bills are completely incomprehensible to ordinary people. Birchbox has figured out how to get people to actually pay for free samples of beauty products via a subscription model.
Check out the listings – it makes for most interesting reading.