What makes a business disruptive?

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In the television show Billions, hedge fund manager Bobby Axelrod tells his wife Lara why her business won’t succeed:

Lara: It was a bullshit meeting. Treated me like my business wasn’t ready.

Axelrod: You weren’t ready … What is that you do that you are the best in the world at?

You offer a service – you didn’t invent.

A formula – you didn’t invent.

A delivery method – you didn’t invent.

Nothing about what you do is patentable or a unique user experience.

You haven’t identified an isolated market segment.

You haven’t truly branded your concept …

So why would an investment bank put serious money into it? …

You weren’t ready. 

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So what makes a business attractive to investors? A disruptive business.

In The Innovator’s Solution, Harvard Business School Professor Clayton Christensen explains what makes a business disruptive. He states that a business is disruptive when it gives people access to something that was traditionally out of reach.

Christensen identifies three criteria to a disruptive business:

  1. There is a large population of people who historically have not had the money, equipment, or skill to do this thing for themselves or have gone without it altogether or have needed to pay someone with more expertise to do it for them. AND, to use the product or service, customers have needed to go to an inconvenient, centralized location.
  2. There are customers at the low end of the market who would be happy to purchase a product with less (but good enough) performance if they could get it at a lower price. AND we can create a business model that enables us to earn attractive profits at the discount prices required to win the business of these over served customers.
  3. The innovation is disruptive to all of the significant incumbent firms in the industry.

When it comes to the legal world, an example of a disruptive business that meets all criteria is LegalZoom. LegalZoom allows a new population to access a “good enough” service that was traditionally out of reach. And allows them to access it from anywhere in the world.

So how should traditional law firms react? According to Christensen, law firms should focus on building their core competencies of the future. The core competencies of the future will be specialized legal advice that computers cannot easily replicate.

Christensen warns against “outsourcing your future”. Rather businesses should focus on building tomorrow’s services. “It’s like planting saplings when you decide you need more shade. It’s just not possible for trees to grow large enough to create shade overnight. It takes years of patient nurturing to have any chance of the trees growing tall enough.”

 

(Views are my own and do not represent the views of any organization.)

Career Strategy and Resilience

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“The pursuit of money at its best can mitigate the frustration in your career… Yet the siren song of riches has confused and confounded some of the best of our society.”      – Clayton Christensen (@claychristensen Harvard Business Professor, in How Will You Measure Your Life)

Clayton Christensen argues that in order to find true career satisfaction, we have to look for work that motivates us rather than work that only fulfills hygiene standards. Motivation factors include: challenging work, recognition, responsibility, and personal growth. Hygiene factors include: status, compensation, job security, work conditions, and supervision. “Bad hygiene causes career dissatisfaction”. However, meaningful work makes the difference between dreading going to your job or being excited about work. Therefore, we should find work that maximizes motivation factors and fulfills the hygiene factors.

Finding a field that does so, does not come about by sitting in our ivory towers but through a combination of deliberate and unanticipated opportunities. Clayton Christensen writes that we should get out there and try new stuff until we learn where our talents, interests, and priorities pay off. Once we find out what works for us, “it is time to flip from an emergent strategy to a deliberate strategy.”

Ask yourself: what assumptions have to be proven true for you to be happy in the choice you are contemplating? What evidence do you have? How can you swiftly and inexpensively test it?

You do NOT want to feel like a company has taken your time and talents in the prime of your life. Be prepared to experiment and pivot in order to adjust your strategy until you find what satisfies your hygiene factors and gives you motivation.

Be patient! Clayton Christensen remarks that if you study the root causes of business disasters over time, you will find a “pre-disposition towards immediate gratification over endeavours that result in long-term success.”

Facing difficult challenges and sometimes failing builds resilience. Those that hit their first significant career roadblock later in life often fall apart.

Martin Short writes in I Must Say: My Life as a Humble Comedy Legend that “when you’re met with fire early, you develop a certain Teflon quality.” After his wife passed away, he told his son: “tough experiences Teflon-coat you and strengthen you against further adversity…[keeps] your setbacks in perspective.”

Martin Short exemplifies Clayton Christensen’s wisdom about trying new endeavours. Martin Short writes in his book that he made a one-year contract with himself to try the “struggling-actor thing” for a year. Eugene Levy encouraged him: “[i]f it doesn’t work out, you’ll still be able to look in the mirror at fifty with no regrets.”

I think it is safe to say that Martin Short signed the right contract.