The Impact of Innovation and Disruption
I learned the basics of business from my Grandfather. He taught me about customer service, products, and basic accounting. I started working in his Purina Feed Store when I was around eleven or twelve years old. He sold veterinary medicine, hardware, fertilizer, seed corn, and animal feed supplements. His main product, however, was ground animal feed produced by his mill with supplements mixed in. Farmers would either bring their grain to the mill for grinding or they would purchase the grain they needed from him to produce the feed they needed. Lola, Kentucky was a small (and is ever smaller now) village and every customer counted for his business to be successful and profitable. Sometime around 1978, we were sitting on the front porch of the store when a farmer drove by on his tractor with a portable feed grinder in tow behind him. My Grandfather looked at me and said, “Well, we won’t be needed much longer.” He managed to keep the store going another ten years or so, but today, no businesses are open in Lola.
Innovation is a fact of business. What is viable today is subject to invention and genius going on somewhere. It’s often argued and I agree that the number one job of any business is to make doing business easier. Customers want services faster and easier. They want their life to be de-hassled. If a company can use their smarts to make it easier to feed their livestock, why wouldn’t customers utilize that option? They would and they did. Our particular family business had a hard time competing with that change in the market. That fundamental change in technology brought about a different way of providing a service that was and is easier. Before that, the barrier to entry in owning your own feed grinding equipment was cost-prohibitive for an individual family farm, but a change in technology changed that fact.
In a modern example, Disney has a problem with their ESPN product. The premier sports-based channel is losing subscribers. Where are these sports fans going? The short answer is research shows that younger sports enthusiasts just want the highlights rather than watching a whole game. They want to be updated in a brief and fast manner. The broader answer is mobile phones and streaming. More fans are going to Amazon, Google, Netflix, and Twitter. So, one way Disney is staying competitive is by launching their own streaming products, Disney + and ESPN+ along with their percentage of ownership in Hulu. Disney + had 13 million subscribers on the first day. AT&T has bought Time Warner. After buying Direct TV in 2015, AT&T is building a massive mobile device and streaming service with a huge storehouse of content because they know where the puck is going. Now, AT&T has launched HBO Max with a target of 26 million subscribers by 2022 and they believe 50 million is doable long term… Customers find mobile apps and streaming make it easier and less expensive.
Today, if you want to take a trip into Mexico using your car, you have to have Mexican auto insurance. Can you imagine? If you go to bajabound.com, it could not be easier. Step one: Enter your info. Step two: Buy it. Step three: Print Policy. By the way, if you want a quote beforehand, that’s one button. When I lived in Kentucky, every year the quilting convention was held in Paducah. Every year I rented my house to two nice ladies from North Carolina who wanted to come to town for the conference but hotel rooms were impossible to get and were sold out years in advance. So why didn’t I think of turning this into a business? I don’t know but in 2007, Brian Chesky and Joe Gebbia decided to rent out two airbeds in their apartment in San Francisco because of the same sold-out conference situation. They called it Airbed & Breakfast. Today Airbnb has bookings of 14.4 billion and is providing lots of additional economic impact and tourism revenue into communities, which did not exist before. Why? Because finding unique places to visit and booking a stay is easy. It’s also disruptive to municipalities who believe they are missing out on fees and taxes they receive when people stay in hotels. Airbnb argues it has no actual local assets and as an online marketplace it shouldn’t be subject to these types of fees.
It takes time for disruption and innovation to be felt in a marketplace, but it is always happening. Business owners must be aware of the constant innovation and defend your space by asking the question: How can I make it easier for my customers to do business with me?
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