Avoiding Disruption | Lessons I've learned

Wed, 20 Feb 2019 04:16:14 GMT

From the perspective of one pursuing disruption.

My first up close and personal experience with market disruption was on a fairly small yet impactful scale. I'd like to say that I foresaw it and successfully avoided it but in reality it was luck that helped me dodge the proverbial bullet.

During my freshman year in college, I was invited to participate in my first small business investment. I joined 4 others with diverse business backgrounds to acquire a very small niche company which manufactured equipment that made gift bows . Their equipment shipped all over the world and to some very large customers. One of the key reasons for their success was their patents which prevented others from achieving their high quality product at a high production rate. This also resulted in a high profit margin for a manufacturing company.

Flash forward several years, as I was exploring ways achieve my lifelong dream of launching or acquiring my own business, I decided to make an offer to buy out my partners. The plan was simple, modernize the business and add new products/services that would increase the potential and decrease the risks that come with being such a niche player.

An offer was drafted that would result in a 20x return and included one key clause, if they didn't feel like selling at that price, I would be willing to sell to them. Three of them jumped at the offer to buy me out. Another joined in selling. The deal was done.

As I went on to looking for another path to achieve my dream, I remember feeling seller's remorse for some time. That is until the disruption story for that old business began to unfold. The culprit, something that I never would have seen coming. Gift Bags.

If you are hoping for an analysis of the impact, I don't have that information for you as I've never seen the details of the aftermath. What I can share is that the business is still ongoing after being sold at a significant discount to the valuation that I had placed on it. In the years since, I've always kept that experience in mind whether looking to build or invest in another business.

Avoidance
Like many engaged in launching or leading a business today, it can be really difficult to assess where future assaults on your business may come from. Whether you are on offense or defense, you may find the following steps helpful.

1. Expand your understanding of the competition .
Look at your competition differently to improve your foresight to future influences. It is likely that your customers may have more choices than you are aware of. Their ultimate choice could be driven by a lot of different reasons but your organization will be better positioned to deal with changes in demand by understanding the options.

Below is one technique that could assist your organization in looking outside out of their normal understanding of their market. It may helpful to start outside of your market to get the brain storming going. This one is a quick look at the competition of United Airlines.

2. Increase your knowledge of global influences.
In this era, you'd better adjust your mindset to the fact that we live in a global society. The transfer of goods and information can happen so rapidly that the Pacific or Atlantic oceans cannot be considered a barrier of entry to your potential competition. There is a very good chance that your next competitor may come from offshore. Take a long look around at some of the low cost countries to scope out potential competitors that you weren't aware of.

While you're exploring overseas, either digitally or in person, try to identify a market or two that your product or service may resonate in.

3. Be the disruptor!
Startups thrive in this mode, yet ongoing businesses often struggle. Regardless of the age of your organization, I'd suggest taking the time to explore a little startup therapy.

Identify the right people in your organization that have key insights or great brainstorming skills. Their length of service in the organization doesn't matter and may actually be a hindrance. One technique to help identify these people is to think about who you would take with you if you were going to launch a new business in your space.

Get this group together and begin laying the ground work for your future.

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Avoiding Disruption | Lessons I've learned

From the perspective of one pursuing disruption.