Putting the consumer at the center of an industry’s ecosystem previously dominated by a handful of powerful organizations sets off a chain reaction that can touch and transform the lives of thousands, millions and even billions of people. Quite a few companies have been able to create so much value through a highly customer-centric global disruption that they become financial juggernauts.
At the most basic level, every successful business—disruptive or otherwise, B2B or B2C—needs to excite its customers, usually in one of three ways:
- Provide goods, services and experiences that were previously only available to the most privileged members of society to a much larger percentage of the population more easily and affordably.
- Give customers what they want, when they want it, and how they want it.
- Eliminate or reduce everyday annoyances like wasted time, boredom, complexity, or unhappiness as well as life-threatening situations like poverty and disease.
Jeff Bezos, the ultimate master of disruption, understood the power of consumer-centricity so well that he developed the ultimate mission for Amazon: “Our vision is to be Earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.” It gives Bezos and his team a lot of territory to work with. In their relentless drive to disrupt and transform any industry, company or individual that has stopped adding value,
As Amazon gained the trust of consumers around the world, the company was able to leverage those relationships to challenge the entrenched major publishing houses and their traditional business and operating models. Amazon disrupted and changed the economics of publishing and made it easy and inexpensive for young and first-time authors to publish and sell books that the traditional publishing world often ignored. Less well-known writers were given the opportunity to tap into a huge, international market of potential readers which had theretofore been unavailable to them.
But this comes at the expense of other, less powerful companies, not just the ones that were disrupted out of existence, but also the legions of vendors who have gone bust or have lost a lot of money selling through Amazon. In that way, Amazon is no different than traditional retailers like Walmart who squeeze the companies that choose to do business with them mercilessly and find new and imaginative ways to charge them often outrageous fees.
Why do these vendors put up with this? Because of the access Amazon has to 100’s of millions of paying consumers…the direct results of this company fulfilling on its very powerful mission.
Internal disruptions, on the other hand, are usually required when a business has lost sight of its customers and their needs and then goes into tailspin because of faltering revenue. In the case of IBM, the back-to-back revolutions of the PC and the client server dramatically undermined IBM’s core mainframe business and forced IBM into a tailspin. Both revolutions transformed the way customers viewed, used, and bought technology. Companies’ purchasing decisions were placed in the hands of individuals and departments—not the places where IBM had long-standing customer relationships.
When he became IBM’s CEO in 1994, Lou Gerstner realized that IBM’s unique competitive advantage was its ability to provide integrated solutions for customers—a company that could represent more than piece parts or components. Like all great disruptors, Gerstner literally forced IBM to become a customer-centric company.
Gerstner’s disruption of IBM was a resounding success. From 1993 until Gerstner’s retirement in 2002, IBM’s market capitalization rose from $29 billion to $168 billion.