Beware the Company Killer

Company killers are everywhere.

No one ever believes their industry or segment will get disrupted by a company killer. Time and time again I’ve shown example after example of it happening  everywhere and people respond with:

“Yes, but it couldn’t happen here because…”. The “because” is always some specific competitive advantage held by their organisation over everyone else that seems unassailable.

Why is it so hard for people to believe?

I am a singular failure at convincing people, obviously.

Throughout the rise of PayPal, the bank I was working at wouldn’t believe. They couldn’t imagine a circumstance in which some geeky online tool could ever threaten their entrenched-for-decades cards business.  Probably too late to do anything about it now, though Amex is having a run at it with their recently released clone.

When faced with a disruptive company killer, especially one that comes up from the bottom of the market – say with a massive undercut in price – most organisations choose to flee upmarket. They reason they can out-feature their competitors and therefore sustain their prices.

Abandoning the low-end is such a simple and such a dangerous choice. It is easy to make too: you imagine that by improving your offer you’re saving yourself. That just because you can reach ever-better, more valuable customers, you’re safe.

What happens when you run out of bigger, better customers though?

Last weekend, I was with someone from a tier-one academic institution. No need to name names, but it’s an institution with a gold-plated academic record, astounding faculty, and superb research. For these reasons, I was told, there was little prospect there’d be much competition from less prestigious institutions who couldn’t hope to challenge in these areas.

True enough, perhaps, but for most people an education is an education. Doesn’t really matter where you get it, so why not pay go for a cheaper institution if the education is good enough? Then, too, its pretty astounding how polytechnics and colleges have been coming up the ranks, isn’t it?  Some of them are doing world class work these days, but from a much lower cost base. The “good enough” offer is just as capable of improving itself as the top of the market one.

Why don’t people believe in company killers? Or more specifically, why don’t they believe there is a company killer out there that will get them?

I don’t really have a very good answer. What I suspect, though, is people imagine that just because their “because” has worked in the past, they expect it will keep working in the future.

Well, history has proven that wrong in every single industry that’s ever been conceived, if you take a long enough view.

I’ve often said that innovators need to be canaries in the coal mine, that this is one of their most important roles in organisations. Innovators are the ones that have to spot the company killers and die quickly so that everyone else notices the threat.

Unfortunately, my track record at being noticed when I’ve fallen off my perch and died is pretty poor. I suspect it is a problem most innovation people share with me.

2 Responses to“Beware the Company Killer”

  1. April 4, 2011 at 9:22 am #

    Great article. Totally agree and glad to be working for a company that believes in innovation now.

  2. April 5, 2011 at 4:21 pm #

    The sad truth is, many companies don’t change because they want to. They innovate because they’re forced to by uncontrollable market factors such as competition. And even then, some leaders are blind to the looming threat because many new ideas are simply absurd.

    Sending more canaries down the coal mine won’t help if the head of the mining company keeps ignoring them. Check out my blog post about creative leadership and innovation here:

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