The Harvard Business School may have a different answer, but here’s my definition of a Disrupter:
The guy who comes into your market and screws up your business by doing something different.
While Disruption, Disrupters and the entire Disrupt Movement have gone to the front pages of the business section the past 18 months, when you think about it, they have been constants in retailing since…well, since the first general store replaced the peddler’s cart. After all, didn’t the first generation of department stores – John Wanamaker and others – disrupt the retail world of specialty stores? Half a century later, the first discount stores of New England disrupted the department store channel, forever changing their business models. Big box category killers, superstore national chains, even Apple stores: they all disrupted what had been going on before they showed up on the scene.
Which of course brings us to today and the disrupter du jour: the Internet, of course. Perhaps it truly is the mother of all disrupters, changing the rules the way none of its predecessors ever did. Certainly, it seems that way to those of us who have no life and are consumed with the ever-changing nature of the retailing business.
But there’s disruption and then there’s disruption, and nobody can quite come to a clear agreement on which is which.
A Chinese Fortune, Cookie
Take the recent coverage of Alibaba – the huge Chinese online business that seems to be a combination of Amazon, Google and a Monopoly game – when it announced it was going public. Two New York Times stories couldn’t quite decide if Alibaba and its czar Jack Ma were disrupters or not. Consider this description from one of the two stories that ran on the same page on the day of the big deal:
“He (Ma) has also proved to be a serial disrupter – an outsider with a knack for creating new markets by reimaging old industries like retailing and finance.”
Contrast that with this next story: “Alibaba’s IPO filing breaks with that well-worn theme. Instead of promising to disrupt an existing market, the Chinese e-commerce giant wants do something more straightforward, but potentially far more lucrative.”
So, disrupter or not? If the Times can’t figure it out, what chance do us mere mortals have?
Disrupters Clean House
Maybe you read Luke Williams’ 2011 book, Disrupt, which no doubt helped create the entire disruption disruption. Williams provides a classic home products example of what disruption is all about: the Swiffer mop. The basic premise with a mop is that it uses water to clean. But sometimes too much water retards the cleaning process. So what happens if you come up with something that cleans but doesn’t use water at all?
Presto, the Swiffer.
The home furnishings business – never a hotbed for cutting-edge anything – has nonetheless had its share of disrupters…barely. Consider the Dyson vacuum cleaner. When it came out in the American market a decade ago, the average selling price of a better vac was about a hundred bucks, maybe $125. Hoover was the best-selling brand and the headlight was probably the biggest advancement in technology of the previous 20 years. James Dyson came along with a machine with advanced (though not totally original) technology, a huge advertising budget and a $400 price tag. Eighteen months later the Dyson was the number one selling machine in the business by dollars and another year or two later, it was number one in units too.
The other vacuum suppliers were not only disrupted, they were sucked dry.
A more recent poster child following the same path is the Nest thermostat. Talk about a product that virtually nobody was paying any attention to! Enter some guys who used to work for Apple with the classic Steve Jobs approach: design a gorgeous product that addresses an underserved category and, oh by the way, charge a lot of money for it. How much did Nest disrupt the home thermostat business? About three billion ways, which is how many dollars Google paid for the company this past January.
Does Domino Know?
Home disruption is also occurring on the retail side. Take a look at Domino magazine. Once the darling of the Gen X set for its irreverent takes on decorating, the publication was a Great Recession victim when owner Conde Nast shut it down in 2009 after just three years. An online version was maintained and there were some one-shots of repackaged content but it wasn’t the same. Late last year Domino Redux debuted, once again under the leadership of its original publisher Beth Brenner, now reinventing herself as chief revenue officer. As an online-only product that planned a print companion down the road, it set out to chase the holy grail of media convergence: read about products and decorating items and then buy those very same things right through the magazine. The old Domino sent you to someone to buy what it featured on its pages. Domino the sequel is cutting out the middleman.
Is it working? It’s too early to tell. But in a world where the line between journalism and commerce is increasingly not just fuzzy but often erased, Domino is certainly out to disrupt the way things have been done in both fields.
Then there’s Crane & Canopy. Started by husband and wife Harvard Business School classmates, this disrupter is trying to turn the business of buying bedding upside down. Right now most of the things you buy to put on your bed – sheets, pillowcases, comforters, duvets, what-have-you, are made by Asian suppliers, most often in China. American importers bring the product in and sell it to retailers. It’s the way it works, whether it’s Bloomingdale’s or Family Dollar…or Amazon.
Crane & Canopy is trying something different. Working directly with Chinese factories, it is designing its own products and then selling them directly to consumers online. Its products are not sold in any stores and are only available on the company’s own site. And by streamlining the sourcing model, it controls the process virtually from start to finish while shaving some costs out of the process. Again, this is another disruption in process. Whether Crane & Canopy can do the volume necessary to sustain its model is the 64-Yuan question.
As with any good disruption, the reaction of those being disrupted is mixed. In the case of Dyson, Hoover, Eureka and all the rest of the established vacuum cleaner market, it is still struggling to catch up. They were clearly caught with their dust busters down and Dyson continues to set the pace.
Nest has certainly shaken up its temperature-controlled market segment, as evidenced by a new Honeywell thermostat now coming to market that is voice activated. But you have to doubt that Google’s checkbook is out for that item.
And neither the new Domino nor Crane & Canopy have anywhere near the scale to make House Beautiful or Bed Bath & Beyond feel threatened. At least, not yet. But I guess that’s the way disruption works. You don’t realize until it’s too late that someone has come in and screwed up your business.
Warren Shoulberg is editorial director for several Progressive Business Media publications in the home furnishings field and could currently stand a little less disruption in his life, thank-you.