Amazon didn’t kill the retail industry, they did it to themselves with bad customer service. Netflix did not kill Blockbuster, they did it to themselves with ridiculous late fees. Uber did not kill the taxi business, they did it to themselves by limiting the number of taxis and with fare control. Apple did not kill the music industry, they did it to themselves by forcing people to buy full-length albums. AirBNB did not kill the hotel industry, they did it to themselves by limited availability and pricing options. Technology by itself is not the real disrupter.
Being non-customer-centric is the biggest threat to any business. Not my words, they’re rad. That’s Davis Masten, making an elegant and effective argument for the disruption business model. Let’s get less concise.
Mr. Masten absolutely isn’t wrong. Every success story he lists got its customers based on a smooth, convenient user experience, and I’ll wager everybody reading this has a hilarious horror story about at least one of the failures.
He does undersell tech a bit. The music industry didn’t force people to buy full albums. You could buy all the singles you wanted. They were just a pain in the posterior to sort and store. Then, iTunes. If AirBNB is killing hotels it’s doing it darn slowly (which I guess might be worse?) and Netflix coexisted with Blockbuster until the former went streaming.
But that’s a quibble. Even in cases where the new model didn’t disrupt the old one until certain tech was in place, that tech was invariably in the service of a convenient, cost-effective user experience. That’s Mr. Masten’s point. Whoever wins at that, wins. Truth.
The question I really want to address: what then?
That’s a question the disruption business model has a bad habit of not answering. Well, I mean, there’s the Uber answer, the Uber answer being “behave contemptibly for years on end until your own shareholders kick you out despite you making them money.” Never give the Uber answer.
It is not a good answer.
For folks looking to be Travis Kalanick in 2013 without being Travis Kalanick in 2017, a level of responsibility is called for. As Mr. Masten points out, “disruption” usually means a smoother, simpler user experience beating the tar out of an older, clunkier one. That’s great!
It also comes with collateral damage.
Terms of employment
The ride-sharing model – and this is everybody, I’m not just picking on Uber – depends on drivers being legally self-employed. AirBNB depends on hosts not having to meet hotel regulations, and guests not expecting them. Put differently, if Uber and Lyft had to pay a living wage and offer benefits, or AirBNB hosts had to meet hotel cleanliness standards out of pocket, those services would keel over and die in a week.
That cash-in-hand approach absolutely makes things simpler for the company and the customer.
To be especially callous, it may also encourage a better user experience because workers are broke and terrified of losing their jobs, unlike, for instance, unionized cab drivers.
It’s also precarious in the extreme, and not just for employees. The Uber/Netflix model is a confluence of easy user experience and the technology that empowers it. That being the case, there will be a new “disruption” every time the tech gets measurably better. Conservatively, we’re ten years out from self-driving cars. Executives at Uber, Lyft, Amazon, Grubhub and every other “disrupter” that uses vehicles – so, all of them – would probably like that to be five years. Their drivers probably feel otherwise.
That’s the Uber error (I have now resumed picking on Uber).
They missed that “customer-centric” means more than “convenient.”
It also means “up to the customer’s standards of good business.” They couldn’t manage that even when it came to their own internal culture, and they paid for it with a public scandal, a non-negligible market segment who refuse to use their brand on principle, and “Uber, but for…” becoming a punchline.
Sustainability of disruption
The disruption model, which was synonymous with fast profits from streamlined processes, is rapidly becoming synonymous with fast failure, toxic corporate culture and horror stories of low pay and poor treatment of customers and employees alike. For those of us ancient enough to remember it recalls the change in public perception of the term “dot-com,” and seriously, short of literal Internet access, anything affiliating your business with the dot-com bubble is not your friend.
That’s still reversible, and Mr. Masten provides a superb starting point.
“Disruptive” companies generally do their disrupting by streamlining user interaction, and whether you’re writing an app or running a bank, user interaction is the most important thing.
But user interaction isn’t limited to purchasing your service, and Econ 101 notwithstanding, customers buy based on more than who offers most for cheapest. In the frighteningly transparent 21st century, being customer-centric means addressing human values along with economic ones, guaranteeing that when you profit, so do your customers and employees. If your standards don’t stand up to the people who buy what you’re selling, you will not be selling it long.
That’s what “customer-centric” means. You can’t disrupt forever. Eventually, you have to build.