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How to come up with a disruptive business model

thomas-edison

“To invent, you just need a good imagination and a pile of junk.”

— Thomas Edison

 

Getting in touch with your inner disruptor

Want to come up with funky new business ideas? Dirty your hands like Dyson, Eberhard and Tarpenning.

 

We study our readers, so we know some things about you. We know you want to be an innovator, delivering new products and services and finding novel solutions to problems. And you’re probably a nethead, too. You rely on the internet for fast, frictionless access to business resources. Did you ever consider that those two statements might be contradictory?

Successful startups are different. That’s what enables them to win customers from hidebound competitors, or open up new markets where no-one bothered to look before. Management gurus agree that the best growth hack of all is a ‘disruptive business model’… but they don’t give much advice about where to start looking for one.

These days, most would-be entrepreneurs try to find their disruptive ideas on the internet. That seems like a plan. After all, the net has bred some excellently disruptive businesses — NetFlix, Uber, Skype…

 

Start-up Business Team Working in Office

 

But, as anyone with a Twitter or Facebook account will tell you, much of today’s traffic can be boiled down to just two words. ‘Me, too!’ That simple phrase is one of the foundations of human culture, creating cohesion and solidarity against encroaching chaos. But the flip side of ‘Me, too!’ is ‘It’ll never work!’.

‘It’ll never work!’ is what you’d have heard in a gas lighting company around 1880, among pre-digital camera manufacturers a generation ago… and in any business that’s trying to maintain its position by resisting change.

Would-be disruptors have to learn how to challenge both ‘Me, too!’ and ‘It’ll never work!’ That’s hard to do in the context of a highly social internet group. But, for entrepreneurs on the net or elsewhere, we can suggest a great way to get started.

Get your hands dirty! Practical engagement with a product or service will teach you much more than discussing its underlying business model ever could. If you’re smart and lucky, you may spot a new angle before anyone else… and, as a bonus, you’ll get practice at dealing with all the shouts of ‘It’ll never work!’

Tesla Motors is a great example of how this approach can play out. When Martin Eberhard and Marc Tarpenning started work on their Roadster electric sports vehicle, they took their initial ideas to automotive engineers across the US motor manufacturing sector. Again and again, what they heard was ‘It’ll never work!’ The battery wasn’t ready for primetime. The charging technology wouldn’t work. Their performance expectations were unrealistic. Why did they persist?

Eberhard and Tarpenning set off on their quest because they had built first-hand knowledge of lithium-ion batteries in the IT industry. They knew that the power train at the Roadster’s heart would deliver, despite what the established companies were telling them. That experience gave them the strength of purpose they needed to get their designs built and their cars sold, even when doing so meant partnering with companies completely outside normal motor industry channels.

 

Tesla

 

That’s another important lesson for innovators. Tesla may have shaken up their target industry… but that wasn’t what they set out to do. In fact, their ‘disruptive business model’ was a by-product of real engagement with their chosen technology.

Lots of other innovative businesses have made that journey from innovation to disruption. Consider vacuum cleaner king James Dyson.

Dyson’s biggest leap began with a dust problem at his startup’s tiny machine shop. Frustrated by the factory’s inadequate air filtration, the young engineer-businessman started asking friends for suggestions… and heard for the first time about the cyclones that enabled larger plants to purge dust from the air without any need for filters.

Commercial cyclones turned out to be so expensive that Dyson was forced to build his own. Since no plans were available, he clamped a torch between his teeth and climbed the fence of the only local factory which had a cyclone on its roof. After a detailed nocturnal inspection, he had his own scaled-down version working in days… and that project got him thinking about the potential of micro-cyclones in the home.

It goes without saying that no established maker would touch his ideas. Lacking contacts in the ‘white goods’ household appliance sector, Dyson built his own R&D and product design departments from scratch.

Four years’ effort and 5,127 prototypes later, he had the blueprints of the world’s first bagless domestic vacuum cleaner, which he soon licensed to builders in Japan and Canada. A little later, he began production in his own UK factory — and within a couple of years had established himself as UK market leader in a sector whose incumbents hadn’t changed for generations.

Businesses don’t come much more disruptive than that!

 

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Follow in Sir James’s footprints with our five-step program on how to come up with a disruptive business model:

 

#1 Frustration is your friend
Did you try a product and find it… uncool? You just spotted an opportunity!

#2 Get your hands dirty
Borrow the old man’s toolkit and take apart the frustrating product. Why is it so bad? How might you improve it?

#3 Learn how not to do it
Who made the frustrating product? Why did they do it the way they did? Might they have used innovations from other sectors to improve it?

#4 Build your mousetrap
Become your own R&D department. Build prototypes until you’re confident that your idea is viable. Use your own money and keep it lean.

#5 Disruption happens
Ready to go to market? Chances are that you’ll need to do things differently. Let innovation be the driver of your disruptive business model.

In an upcoming piece, we’ll see how disruptive business models play out in a place where there’s nothing much to disrupt. Intrigued? We hope so…




Jerre Baumeister

Jerre is the founder of TweetFavy and the co-founder of Novim Media. He is also a web-developer & -designer who specializes in back-end development. If you'd like to connect with him, you can find him on Twitter @JerreBM