Non-consumption, not Competition
When starting off on a new idea, there are two possible approaches: to compete against incumbents with a product or service that is faster, better, cheaper; or, to look at non-consumption and unmet needs. Getting existing customers to change is not easy – the “switch pitch” must be very compelling for them to stop using what they are doing and start using a new product. Changing behaviour and products takes time (and therefore money). An alternate go-to-market strategy can be to look at customers who are non-consumers and need a product that is just about good enough for specific use cases.
Clay Christensen’s Disruption Innovation theory and W. Chan Kim and Renée Mauborgne’s Blue Ocean strategy outline the thinking around the non-consumption approach.
Disruptive Innovation (from BMC Blogs): “The theory suggests that a small organization with fewer resources has the ability to challenge their larger counterparts by focusing innovative products and services toward the low end of the market, which is often ignored by incumbents as they grow profitable. The new entrants are gradually able to improve their innovation performance to attract the high end of the market, without compromising their original qualities – such as low cost, convenience, access or security, among others – that allowed them to succeed in the underserved market segment. When incumbents fail to identify the market void and realize a small company competing for their mainstream market-share, the damage is already done and disruption has occurred through the small company’s innovation.”
Blue Ocean Strategy: “Blue ocean strategy is the simultaneous pursuit of differentiation and low cost to open up a new market space and create new demand. It is about creating and capturing uncontested market space, thereby making the competition irrelevant. It is based on the view that market boundaries and industry structure are not a given and can be reconstructed by the actions and beliefs of industry players.”
When I launched IndiaWorld in 1995, I focused on Non-Resident Indians – who had limited access to Indian news and information. The Internet bridged the gap with a site which did not match up the traditional Indian newspapers and magazines but offered it to them faster and cheaper. Over time, we improved and widened the portfolio of our content offerings. By the time the mainstream Indian media woke up to the Internet opportunity, IndiaWorld’s websites had created a daily habit that was hard to break.
More recently, when we take Netcore’s email products to the US, we found only limited success – because we are offering a product similar to competitors and trying to compete in the red ocean. This is where I have been thinking about microns (micro newsletters) with a radically different pricing as compared to regular emails – as a possible disruptive innovation at the low-end and also creating a new market space for daily branded emails.
For an entrepreneur, the ideas of disruptive innovation and blue ocean are two very good starting points for thinking about the product and the target customers.
