5 Secrets to Recognizing an Industry Ripe for Disruption

The two biggest advantages a startup can have are complacent competitors and their customers resigned to the status quo.

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By Rob Biederman

Opinions expressed by Entrepreneur contributors are their own.

Unless you write Hallmark cards, nostalgia isn't a strong foundation for a business.

The way things have "always been done" isn't necessarily the way they should be done, at least anymore. If you have an idea that will seriously mix things up, don't let those who cling to the status quo ruin your fun.

Entrepreneurs greatly increase their chances of startup success when they establish their business in an industry that's ready to be disrupted. Those are environments where customers are underserved by existing companies, an industry has become complacent or where small customer annoyances are accepted as a fixed reality.

Related: How to Disrupt an Industry in Three Steps

Setting out to disrupt an industry can be daunting but, believe it or not, your small size is a unique advantage when disrupting an industry. Startups have the freedom to rapidly innovate, change their offering and approach various customer segments differently. Disruptors are unique and more attentive to the market, noticing needs and trends before their competitors.

All these advantages will help you surpass the big dogs but you still need to approach the situation with finesse. Here are five key steps for a successful disruption:

1. Examine the market. Look for complacency within a market to determine if it's ready to be disrupted. Don't assume that the way the dominant players do things is the most efficient way. If you introduce a product or service that solves these issues, you can positively transform an industry.

PivotDesk, for example, disrupted the real estate industry with its office-sharing marketplace. Companies or landlords with extra office space can rent it out to businesses that don't want to commit to a long-term lease. PivotDesk turned losses that were once unavoidable into financial opportunities.

2. Look through your customers' eyes. To test your product, put yourself in your customers' shoes. Gather feedback on usability to explore possible improvements. Be critical and innovate based on your customers' needs. Think about systems and expertise that your company can leverage. This approach will help you become a market leader.

Airbnb is a great example of this. It upset the hotel industry by allowing homeowners to connect with short-term renters but, before it really took off, the founders were baffled by flatlining revenue. When they pretended to be users, they discovered the photos were low quality.

Related: How a Brand Pivot Helped This Startup Disrupt a $30 Billion Dollar Industry

To resolve this issue, the team flew out to host locations and took new photos with high-resolution cameras. Their revenue doubled as a result.

3. Don't underestimate payoffs. Customers love tweaks that improve their experience. Making something more convenient can lead to big payoffs, even if the improvements are minute.

Amazon, for example, disrupted the book industry when it put e-books on the map. Customers were delighted to be able to easily carry 100 books on a single device. Because the e-books could be downloaded instantly, Amazon eliminated the time customers had to wait for books to arrive on their doorstep.

4. Don't take assumptions for granted. You will constantly hear, "It's always done this way" or "we could never get people to buy that approach."

But the crazier the idea, the more likely it is to succeed. Existing players are often handcuffed by their current business models and can't fix pain points, so you have the upper hand. Go right for the throat. Tell your potential customers why they're overpaying, being underserved or missing out on variety.

5. Trim the fat. Pinpoint common elements existing players offer that customers don't value. My company, for example, looked at the consulting world and saw a lot of fancy offices, corporate gyms and partners earning millions of dollars a year. Once we removed those extraneous features, we could better focus on our clients.

When you're disrupting an industry, you can focus on end goals without having to follow a traditional path. You're allowed to pick and choose what works and wipe the slate clean of what doesn't. Then, when you've changed the industry and established your new business, you can forge your own path. Just don't get stuck there.

Related: The Business Model for Disruption

Rob Biederman

Co-founder and CEO of Catalant

Rob Biederman is the co-founder and CEO of Catalant, a company that connects companies to talent and knowledge in real time. Catalant has a global network of more than 40,000 experienced consultants able to work on research, strategy, marketing, finance, sales, operations and product initiatives.

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