I received an email from Dr. Marcus Blakemore about a very fascinating website called Fiverr.com. At first, I was very skeptical because freelancers like technical writers and web designers were offering their services for $5. In fact, these services were listed well below market prices. Yet, the site also offers bizarre services, like someone writing something on his or her lips and a person dressed in a clown suit willing to send greetings to anyone. Loaded with my conventional wisdom of ‘you get what you pay for,’ I gave the website a chance. Through this effort, I found some vendors were outstanding while others were mediocre.
Amazingly, the owners of Fiverr.com had created a niche for themselves with freelance websites, such as Elance.com or Guru.com. However, a new value proposition was also developed. For experienced sellers, Fiverr.com provides a promotional venue where they can sell more expensive services down the product line, newbie sellers can turn their hobbies into financial gains, and value-seeking buyers can secure some quality services well below market value. Yet, Fiverr.com was disruptive to the conventional way of marketing a freelance service.
With the pressures of globalization all around, organizations must understand disruptive marketing and innovation in order to sustain future success.. Market disruption is never a friend to managers who are traditionalists and are risk adverse to change.
Market disruption relates to a situation where markets cease to function in a conventional manner, typically characterized by rapid and large market declines. Yet, disruptive innovation must be on every business’s radar. For our discussion, we use disruptive technology and disruptive innovation interchangeably. Disruptive innovation relates “”to innovations in products, services, or processes that radically changes an industry’s rules of the game for producers and consumers.” There are tons of examples where low tech products or services have come from nowhere and beat out an industry leader. Clayton Christensen, author of The Innovator’s Dilemma, has chronicled how successful businesses have been overtaken by small disruptive innovations. He further argues the changes associated with disruptive innovation: Careful planning, followed by aggressive execution, is the right formula. But in disruptive situations, action often must be taken before careful plans are made. Because much less can be known about market changes, or how soon they will happen, organizational planning must serve a very different purpose: Businesses must use their plans for learning rather than plans for implementation.
For example, Netflix developed a niche of videos through direct mail, or later, online, that shell shocked the industry leader, Blockbuster, and sent them spiraling downward. When Blockbuster realized what was happening in the market with Netflix’s disruptive innovation, it was already too late. Mapping out disruptive marketing is not easy. It requires companies to change. Richard Daft, author of Management, notes, “Successful change requires that organizations be capable of creating and implementing ideas, which means the organization must learn to be ambidextrous.” This action is not easy. Consequently, companies must be ever ready to rapidly adapt to changes while surveying the market for disruptive innovation over the horizon.
© 2013 by Daryl D. Green
Management by Richard Daft
The Innovator’s Dilemma by Clayton Christensen