October 9, 2024

Wake Up Sid, Disruption is the New Business Model

Wake Up Sid, Disruption is the New Business Model
disruption-anupartha-blog

Next week, I am travelling to Boston. I won’t be checking into Four Seasons. Instead, a few days ahead of my schedule, I will log on to Airbnb and check out the site inventory, see if anyone’s nice studio apartment is up for grabs, book it and move in.

Headquartered in San Francisco, California, Airbnb is a marketplace for people to list and monetize their unused apartments around the world and connect them to people like me — online or from a mobile phone. Go, check out some of their listings. For $200 a night, it’s not a bad deal against the $595 I might have to cough up at Four Seasons, Boston. And Airbnb has 500,000 listings in 33,000 cities and 192 countries to choose from –presenting a very viable, fascinating alternative to hotels.

If that isn't disruption, what is?

Welcome to the ‘share’ economy, where you can create value from any unused or underused asset, merely by leasing it out to a bigger pool of users. Freecycle was a pioneer in this space. The brainchild of a single mom, Barbara Handley, she launched it on May 2003 to quickly dispose off some of her unused personal artifacts. Today, there are thousands of Freecycle clonestied to a revenue model –Snapgoods, RelayRides and Sidecar, Parking Panda (Rent out your unused yard for parking), or Liquid (Rent-a-bicycle for $20/day) – the business opportunities are endless.

Very soon, we may have telecom companies allowing users to ‘pool in’ their unused talk time; third party insurers allowing people to share their unclaimed medical insurance; HR departments allowing employees to swap their annual vacation time through some kind of an online exchange forum – again, the possibilities are infinite.

Own less, do more

Disruption is a very serious business today. Have idea, will work. Have an unused asset, will use. Because our business world is cyclical, what we are witnessing today is a movement back into time; a reversal to the barter system, only the markets can each be more byte-sized; so customization is possible, making services more responsive, nimbler, cost-effective, time-saving and simply ‘out of the box.’

Not too long ago, big-box retailing meant a sure death knell for the neighbourhood mom and pop stores. But now in countries like India where Wal-Mart is yet to take roots, a new hybrid model is being explored; here the large on-line retailers like Amazon and eBay are tying up with the smaller stores as a pick-up/delivery center. Consumers get the best of both worlds as they shop on-line ditching the queues but still get to do their “shop talk” as they pick up their stuff.

Yoga on the call

A friend of mine, a fitness freak, was used to shelling out $100 a month on her monthly gym membership, until she stumbled upon YogaGlo, an on-demand yoga website. She now pays $18 a month for subscription and the service gives her the flexibility to design her own yoga session - 30, 45, or 60 minutes –even pick her own yoga guru and choose her own background track! The last I read was that YogaGlo was giving established fitness chains like Town Sports International (CLUB), Life Time Fitness (LTM), Equinox, and Sports Club/LA a run for their money, thanks to the level of convenience and customization it offers, for a much smaller price.

Are you a listed member of the ‘Gig Economy’?

Some fifteen years ago, this space was opened up by Elance, Guru and Odesk. Today, it’s usurped by a younger lot of start-ups - TaskRabbit, Fiverr, Exec and Amazon’s Mechanical Turk. On Fiverr, the price of a service starts at $5 – how cheap can you get (no pun intended!). The jobs frankly, may be small ticket, but the composite earnings could be big for independent contractors and those interested in moonlighting to supplement their recession-hit income. On TaskRabbit, you can get someone in your neighborhood to run errands for you, for a small fee, of course. The people who do these gigs are monetizing their time, if they don’t happen to be doing anything more productive in the meanwhile.

Rent is the new ‘own’, but with a twist

Uber, for instance, started out as a P2P search engine to connect riders to drivers through their smart phone apps, but today, it’s really changed the definition of car ownership. People have begun to question: “Do I really need to own a car, when there is Uber? Yet another worthy example of disruption - parking at airportscould once used to be a big hassle. Not anymore. You can get free parking with FlightCar, if you rent out your car through them, when you happen to be traveling. Instead of paying steep parking at the airport, where your car sits idle, this could be a win-win deal for all stakeholders - parkers end up saving and making a quick buck, while renters get a cheaper price on the car service.

Anywhere, anytime learning

Way back in 1999, The Massachusetts Institute of Technology (MIT) was the first to acknowledge that online courseware could be a major disruptive force to their business. It responded promptly by moving all of their courseware to the net. The move inspired over 250 other institutions to set-up Oeconsortium. Initially, the prospect of collapse of a traditional edifice rattled the academic community. They feared a significant loss of revenue. But MIT assured them that their degree was not just about courseware – it was also about heritage, equity, faculty etc. Ten years down the line, start-ups are offering access in multi-media-enabled environment that is beginning to dent the brick-and-mortar model (Think MOOC. Think Al Huda eCampus. Think Coursera). There is a similar disruption occurring in school education too. In 2004, Salman Khan, a hedge fund analyst, began posting math tutorials on YouTube. Six years later, he has posted more than 2.000 tutorials, which are viewed nearly 100,000 times around the world, each day! KhanAcademy is now on a mission- of changing education for the better by providing a free world-class education for anyone, anywhere!

Disruption, everywhere we look

From manufacturing, to insurance, to retail to technology – every familiar traditional model is caught in a state of flux. The main gainer is the consumer because this high-level disruption is making it easier for him to buy, enjoy, sell, work, live, play, earn or learn more out of every service, he pays for. Who is left worried? Obviously, champions of the old order. The incumbent giants of our economy, in every industry are feeling the heat. When they think of segmenting their market, they discover the pie is already split wide open. When they attempt to re-think their pricing structure, they discover the traditional pricing model has already gone defunct. They jack up their R&D spend only to find there are tens of competing prototypes already in the market! The rules of this game are being rewritten, faster than anyone could write an obituary. Time to wake up, Sid, disruption is upon us. (Watch this space. We are going to report on the winds of disruption, as they sweep every business vertical, in every corner of the globe)

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