How To Identify Industries Ripe For Disruption
Historically, the companies that have made the most impact and profits have been those that were able to tap into a particular industry at just the right time and with just the right innovation. In doing this, they shook things up and made customers shift their expectations completely from what had been the norm before then.
Think about Ford and his model T, Apple and the iPhone, and Uber and its ridesharing model. All of them disrupted their industries by catering to needs many customers didn't even know they had at the time. The good thing is that there's no limit to innovation, as we can see from the continuous disruptions taking place in various industries. Here's a game plan to help you identify your own window of disruption.
Ditch the big picture
As Luke Williams said in his book Disrupt: Think The Unthinkable To Spark Transformation In Your Business, the problem with many of the entrepreneurs looking to disrupt an industry is that they are too focused on "pain points." While trying to fix pain points isn't bad by any means, they are usually very obvious to everyone already, meaning that you'll be dealing with lots of competition, including from corporations with tons of money to throw at the problem.
A better route would be to identify issues that don't qualify to be problems in the minds of many people. Because the business mentality is mostly "if it's not broken, don't fix it", those small areas that could be improved but have not been fixed because they don't seem major could be the best place for you to innovate and stand out from the competition.
Follow the tech
In the past, opportunities to innovate were closely tied to patents and big R&D budgets by the biggest companies, and while there's still an inherent advantage in those, the rise of open-source technology means that you can actually access high-level technology much more easily.
For the would-be disruptor, this presents an opportunity to build on available software and use them for things that even the initial designers might not have thought of. Look at blockchain technology, for example. Since it came to light, it has been implemented in a diverse array of industries, from cyber-security and fin-tech to health and even agriculture.
Another good example of this is the Russian billionaire Oleg Boyko's recent investments in fintech. As for why he is investing so much in companies involved in payment services, marketing, data processing, and credit-risk management, his response is that the he intended to leverage them all to proffer solutions to consumers dissatisfied with the mainstream banking sector.
That example shows that even proprietary technologies can be harnessed, as long as you comply with all the copyright regulations. The point is to think of ways in which the technology can be implemented apart from its current uses.
Look for complacency
There's nothing as frustrating for customers as the feeling of being taken advantage of. As explained in this Mckinsey publication, companies who come to the rescue with better quality products or services, improved customer care or some innovative practices would likely be rewarded with patronage and loyalty.
Sometimes, disruption is not in the form of advanced technology, but just advanced managerial practices that boost productivity and outwit the competition.
In this Kettering University article, the effects of natural disasters on the business of some of the world's largest companies (such as Toyota, GM, Nissan etc) was highlighted, showing that improved supply chain management could have prevented a large proportion of the losses. For a business person looking to disrupt the auto industry, that would be a potent opportunity to cut costs and improve efficiency.
Broaden your customer evaluations
In this study in the MIT Sloan Management Review, the creation of new markets is identified as the first criteria for identifying disruptive opportunities. The implication is that truly disruptive innovations create entirely new markets containing people who could not participate in the previous ones due to high cost or a lack of skill. Initially, the innovation would run parallel to the existing markets but eventually be established as a viable alternative.
For an entrepreneur, the key to taking advantage of this is to broaden the scope of observation to include people who are not yet customers. The trend of surveying only present customers and acting based on their responses alone was what cost IBM its part in the mini-computer revolution (its customers stated that they preferred their mainframes, up until the mini-computers became powerful enough to substitute). Blackberry is also another good example, with its dedication to the enterprise segment when customer values had moved to versatility.
Related: Why Today's Young Professionals Are Turning To Knowledge Entrepreneurship