If a disruption is a change to the norm, then Value-Disruption is  a change to the norm that creates value.

I’d like to start a dialogue about this topic.

I’ve been writing recently about value-disruption based on work by Clayton Christensen and Alex Manu.  The key ingredient seems to be: a new resource and associated interfaces (a value-disruptor) allow a new behavior to emerge in a target group that satisfies a human motivation.  This new behavior disrupts relationships (in a positive way) and so creates new value.

Value-Disruption Elements

LinkedIn Question

After having written a number of posts on this topic (here, here, here, and here)  I wanted to see what others thought so I asked professionals in LinkedIn this following question.  “What examples can you give me of companies that are value-disrupting their industry?“

I received some interesting answers back.  (And I’m going to ask you to submit your thoughts at the end, with a twist.)

Well Known Examples

First, well know examples were submitted.

• Circe de Soleil
• Apple with iTunes
• Nintendo Wii
• Google with many of its applications: Search, Google Maps, email,…
• Many social media sites like Facebook, LinkedIn, Twitter

Then a couple of airlines.

• Virgin Air
• Porter Air

While the airline examples offer a better service than others and have carved out a niche, I can’t see how they have a disruptor in play that allows a new behavior to emerge. (ennova)

Tor Grønsund suggested

Swiffer (P&G) disrupts the vacuum cleaner.

Connecting a power-driven machine doesn’t work for small jobs.  So instead you use a swiffer which has reasonable “pick-up” capabilities.  A small but reasonable level of new behavior (ennova)

Asif Khan suggested

Vex Canada

They are building a national WIFI network that’s free.  They will offer free WIFI in restaurants, coffee shops, airports etc.  by having suppliers to these locations pay for installation and running costs in  return for advertising for people using the wifi.

They should certainly disrupt the industry of paid WIFI in Canada and allow 1000′s of people to connect to the web in 1000′s of new hotspots around the country.  Significant new behavior can now emerge. (ennova)

George Hazapis suggested

The publishing industry is undergoing a transformation, re-engineering its value chain.

Vizu

One example would be Vizu, a company behind Ad Catylyst, a digital ad effectiveness measurement system. The company measures how online ads impact viewer perceptions of key brand attributes.

Zeta

Another company is Zeta which provides complete digital solutions to enable publishers to market through email and other digital channels to drive traffic and improve engagement. Companies are transforming the industry by taking costs out of the business, increasing the engagement factor for print, adding value to content, improving web-based CPMs, assisting publishers in increasing the value of content within their eco-systems through the use of short codes, and tagging. There is a burgeoning mobile market and publishing is going online & mobile.

Boy, you can just imagine all the new behaviors will emerge from brand managers now that they have tools that gives them real data.  (ennova)

The hospital business model is undergoing disruptive innovation as the hospitals need to keep everything & everyone well at low cost.  Hospitals should cede market share to disruptive business models, patient by patient, disease by disease starting at the simplest end of the spectrum of disorders that they now serve.  Hospitals need to deconstruct their activities operationally into two different business models: solution shops and value-adding process activities.

Aravind Hospitals

in India which do eye surgery, and

Coxa Hospital

in Finland which focuses on hip and knee replacement surgery.

People travel out of country to get top notch medical care at lower rates and faster than they can in their country. Significant behavior change. (Ennova)

Thanks George for these four strong examples.

First, thanks to all the LinkedIn contributors for your descriptions of value-disruptions.

So, what examples would you provide?  Most importantly what do you believe is the relationship between the degree of behavior change and their business success?

Lastly,  thank-you for visiting http://ennova.ca

Google’s Nexus is hot.  The question is. . . .  is this a game changing device?  Will it disrupt the Smart Phone industry by bringing in new capabilities that sweep away the incumbents?

Background – Current Share

Research In Motion (39%) continues to be the smart phone market share leader, down 1-pt since our previous survey in September. At the same time, number two Apple (AAPL; 31%) has edged up 1-pt since September. We note that Apple has experienced continuous market share growth every quarter since the iPhone launch two-and-a-half years ago.  Palm (6%), after holding steady in the previous survey, has slid 1-pt since September. (From Cellular news)

Maybe yes?

Google has a loyal following who love everything Google.  So there will definitely be a movement towards them.  Cellular News says  21% of those planning to buy a smart phone in the next 90 days say they’d prefer to have the Android OS on their new phone – a monstrous 15-pt jump in just three months.

To put this in context, three months ago Android OS was tied for last place in consumer preference among the major mobile operating systems. But since then it has surged into second place ahead of all competitors except the iPhone OS X (28%).

But

Buying intentions is one thing.  However, translating intentions into sustainable purchases based on significant differences is a horse of a different color.

DAVID POGUE of the New York Times did a good review of the features and capabilities of the Nexus.  When you read through his article you’re left with the impression that with the exception of “everywhere” voice recognition most all else is a little better or the same as the other features, with the exception of apps where Apple holds the lead.

Why Not Yet.

To disrupt an existing industry you have to create sustainable buzz, as opposed to just marketing buzz.  And sustainable buzz is generated when a latent behavior emerges – when the use of a technology affords the user the possibility of doing something they couldn’t do before that is meaningful, reliable, and accessible.  (Previous posts on disruption  here and here.)

For example, the Blackberry brought us push email.  That allowed us to stay connected everywhere.  New behaviors emerged, not all of them desirable mind you (emailing during a meeting).  This new behavior enabled by the Blackberry disrupted other phones and organizers (the Palm).

iPhone utilized the programmable screen with no keys.  That allowed more intuitive interfaces and a whole slew of new behaviors to emerge.  Face-Book, Twitter, Traffic alerts, conversion calculators, games, games and more games, etc.  Over 100,000 apps have been created in all sorts of areas with a corresponding increase in new behaviors.

Now Nexus has arrived.  Its new capability is voice recognition across all applications.  That means that where users are limited in their ability to type, or interact with the screen they can now use voice commands.  That’s good in the car for example.  So we can expect new behaviors to emerge in hands-free environments, subject to increasing legal restrictions for phone use in the car.

Is that enough to create the buzz?  To see massive movement from iPhone and Blackberry over to Nexus.  It doesn’t seem that there is enough new behavioral capability that would warrant such a move.  Especially when voice recognition reliability is not 100%.  Less than perfection is okay when you ask an app to open.  Not okay when you dictate a letter to a client and it contains errors.

Then Again

But. . . . the big BUT.   Google does have presence.  People will buy the Nexus.  They will become a direct player in the Smart phone industry.

AND, their operating system is open source.  Blackberry and iPhone are not.  With smart-phones only holding about 3% of worldwide market-share (17% North America)  it is entirely possible, (likely?) that from this base their open source developers will develop new disruptive capabilities that Apple and RIM cannot compete with.

So, the battle has begun.  Goggle won’t disrupt with this first addition, but don’t count them out.

Tips for business owners and executives

What can we learn from this story:

1. Not all disruptors have the power to value-disrupt a market.  Nexus everywhere voice recognition by itself is not enough.
2. Sometimes you first need to be playing in a market before you can disrupt it.  So adding a disruptor to your offering let’s you gain fast share and establish your credentials as a player.
3. You need to have a follow-on strategy for how you will ultimately value-disrupt.  Google’s open source operating system, with its faster speed to market for new disruptors, is the play with the potential to give them the leadership in the market.

Thank-you for visiting http://ennova.ca

It’s been reported multiple times (here, here and here) that Pepsi will not be advertising in this year’s NFL Superbowl.

Pepsi had been a major advertiser during the Super Bowl. According to TNS, the company spent $142.8 million on the 10 Super Bowl ads from 1999 to 2008, second only to Anheuser-Busch, which spent $216 million.

The nation’s second-biggest soft drink maker is plowing marketing dollars into its “Pepsi Refresh Project” starting next month as its main vehicle for Pepsi. The project will pay at least $20 million for projects people create to “refresh” communities.  A Web site will go live Jan. 13 where people can list their projects, which could range from helping to feed people to teaching children to read. People can vote starting Feb. 1 to determine which projects receive money. (sports.espn.go.com)

Still, CBS said in November that it had sold about 90% of its advertising spots during the game. (CNNMoney.com)

There is more going on than the savings.   When you unpack this story you reveal a truth about differentiation and the power of value-disruption.

First, unpack advertising at the Superbowl.  It’s a premier event watched by millions world wide.  Your brand picks up prestige: success, top of the game, toughness, etc.  However, it remains a passive medium.  The consumer/viewer watches and may or may not assimilate the message.  Which is why so much is spent on execution.  You need to capture viewer’s attention.  But behaviorally, there really isn’t anything that different compared to other adverting, other than scale, scope and prestige.  They are all passive.  The viewer behaves the same way whether they see your message at the Superbowl, or on the latest show of Desperate Housewives.

Compare that to the new connection they are going to make.  Viewers are transformed into users.  They interact with the site.  They put in ideas. They make comments.  They vote on other’s ideas.  They are part of a system that helps others.  They engage.

In this case the consumer’s behavioral construct is deep, multifaceted, and more emotionally relevant.  Their relationship with Pepsi has changed from passive to active.

The result?  The second largest advertiser of the Superbowl has left the Superbowl.

Going Nowhere

Opps….. Superbowl advertising just became a commodity.  Not because someone came up with a bigger and better event.  No, because they were value-disrupted by a technology (web 2.0) and an associated interface (voting system)  that enabled a new behavior to emerge.

And that, my friends, is the key to how you differentiate.

You can learn more about value-disruption in earlier posts here and here.

Thank-you for visiting www.ennova.ca

Unpacking stories to find the truth that lies underneath is always fun.  Here’s a story about a janitorial firm in Cincinnati Ohio that is both inspiring and, reveals how to escape commoditization by differentiating.

First the story.  The basic facts are these.

• They are a janitorial firm (since 1972) that service office buildings over 100,000 sq. ft.
• Like companies in the industry, their employees were largely immigrants looking for a first job that could lead them somewhere else.  After all, who wakes up thinking of cleaning toilets as a career?
• They like everyone else suffered from massive turnover – 400% a year (Yes, that’s 100% every 90 days.)
• You can imagine the turmoil and the low, low margins this level of turnover would create.
• So they implemented a bold idea.  They provided a Dream manager for their employees (all of them).   The dream manager met monthly with the employees and helped them articulate their dreams, plan for it, and because a financial component was usually involved, helped them save for it.

Think about the boldness of this idea for just a moment.  How crazy is that?  A dream manager?  Who has ever heard of such a thing.  A company that spends money helping you achieve your dreams?

Back to the story.

• The Dream Manager Program worked. It slowly gained momentum as employees started achieving their dreams.
• It really took off when Rita bought a house.  Then everyone saw that they too, could realize their dreams. (A car, a good education for their kids, a proper Christmas, a vacation back home, simple things many of us take for granted.)
• The results were (are) incredible.  In five years, 2,785 significant dreams were realized, turnover fell to 4%, gross revenue tripled, profits rose every quarter.
• Their costs are lower. Their client satisfaction tops everyone else (As you can imagine, their employees are very loyal and willingly work very, very hard). No competitor can match them.  They are differentiated.
• BTW, there are now 11 full time dream managers on staff.

What does this all mean?  Should we all hire dream managers as part of our business model?

No, not necessarily, but it does teach us an valuable lesson about how to differentiate.  It starts with a new phrase - value-disrupt.

A rose disrupts the moment. To differentiate, disrupt behaviour

Greatness has always disrupted the norm.  From fire to electricity; from writing to the iPod; different objects, different models, different ideas all inspire latent behaviours to willingly emerge that create new value.  (That’s they key!!)

Let’s unpack the story and discover the formula for differentiation.  As we go through the story we underline the elements.

1. Jancoa recognized a human motivation that existed in their target group.  In their case – the motivation of their employees to dream, to hope for a better future.  (While this motivation is universal for most of these immigrant employees they had long since stopped dreaming.  After all, life taught them they would never reach their dreams.)
2. To enable that motivation to express itself they created a disruptor – (The combination of a resource and associated interface)  = the dream manager with the monthly meetings.
3. The value-disruptor provoked a latent behaviour to willingly emerge.  Employees articulated their dream, planned for them and with the help of the dream manager, monitored progress a monthly basis until the dream was realized.  They did so without being coerced.  They wanted to do this.  A latent behaviour willingly emerging is the KEY.  It’s a new behaviour that a target group willingly adopts that causes a disruption to occur.
4. It disrupted the relationship between the employees and the company.  Duh Yeah!  I don’t just clean toilets here.  I make my dreams come alive.
5. That value-disrupted their markets.

So there you have it, the formula for differentiation.  I’ll return to this value-disruption concept in future posts.

Tips on disrupting

1. Focus on the new behaviour you wish to emerge.  As a result of changing your offer will they do different than they did before?
2. Test it for willingness.  Why will the target do it willingly?  To answer this question think about how easy it will be and how strong the motivation is.
3. Finally, remember that technology by itself is useless.  What is the work process that surrounds it that makes it useful?  Fire by itself just burns.  When you have a work process to control fire you have something useful that will value-disrupt.

Many thanks to Alex Manu who introduced me to this concept.

Thank-you for visiting www.ennova.ca.

You can buy their book about their experience here.  It’s a great holiday gift.

Since February 2009 Jonathan Burns and I have had the privilege of speaking to over 100 CEOs of Canadian firms through the Presidents of Enterprising Organizations network and the Women Presidents Organization (WPO) on the subject of Web 2.0.

Here’s what Jonathan has written about our experience.

The companies whose executives have seen the presentation include Lyreco, Energizer, McMillan, Toronto Board of Trade, Consumer Impact Marketing, Melitta, Kids Help Phone, GEO Global Network, Tyco/DSC, Swiss Natural Sources/Swiss Herbal, Wardrop Engineering, Jan Kelley Marketing, Marsulex, Kinectrics, Progistix Solutions/SCI Group, Peerless Electric, Pathway Communications, Glenway Golf & Country Club, Junior Achievement, the College of Massage Therapists of Ontario, RHR Canada, Triumph International, Summerlea Office Solutions, LaserNetworks, Soft Care Corp, HostMySite.com, Aseco Integrated Systems, Greenblue Systems, Skyway Wind Energy Group, Torino Drywall, 360 Visibility, StaffClick Personnel, Blazing Design and The DOUG Agency.

Most CEO’s have heard of web 2.0 but they don’t really know what it is. When I ask them they say “it’s Facebook and Twitter and all those kind of web programs my teenagers use.” At the start of every meeting we ask them to share how Web 2.0 makes them feel. From younger groups (CEOs in their 40s) I hear “exciting, opportunities, possibilities, connections.” From older CEOs (50+) I hear “it’s weird, my kids are into it but I don’t get it, an invasion of my privacy, I feel left behind, I feel a loss of control, I feel overexposed, it’s a big waste of time.”

The big idea I share with CEOs is that Web 2.0 is fundamentally about the shift from publisher generated content to user generated content. Leveraging web 2.0 for your business means harnessing the incredible power of user generated content. But it requires a huge paradigm shift and many companies are getting left behind.

In a July 2009 global survey of 1,700 executives on Web 2.0 by McKinsey & Company “69 percent of respondents report that their companies have gained measurable business benefits [from Web 2.0], including more innovative products and services, more effective marketing, better access to knowledge, lower cost of doing business, and higher revenues.” Click on the chart to the right to see the details of this.

I quickly realized that the technology aspect of Web 2.0 is of secondary importance and it’s rarely why the implementations fail. The primary issue is always people and their work processes or online habits. The introduction of internally facing web 2.0 technologies into a workplace is fundamentally about changing people’s work processes, the way they get their work done. And if it it’s not planned around and integrated into the way users currently get their work done, then you have a sure recipe for failure.

The other observation I made is that internal web 2.0 applications are often brought on by the IT department to solve a particular problem and are rarely considered in the broader context of the firms business model: how they are organized and how they make money. Yet when you consider how you might leverage the power of user generated content in the context of a firm’s business model you open up the potential to enable significant profit growth by making strategic changes to the actual business model.

Today most small and mid-sized firms will be able to find ASP/SaaS (ready made) solutions for their Web 2.0 needs. We have spent time researching and engaging with the top ASP/SaaS solution providers for implementations for 5 users all the way up to enterprise installations for thousands of users so we can recommend the best solution for your specific needs. We have also researched the best technology partners for customized solutions if you want to build off your existing Microsoft Sharepoint platform and get more functionality than the ASP solutions provide.

Companies that are finding our services most useful are $10-500 million Canadian companies where the leaders are aware of web 2.0 but don’t understand the opportunities it presents or how to move forward to capitalize on them. Our particular specialty is guiding management teams through the discovery, decision and implementation phases built on a mutual understanding of the firm’s business model.

If you know anyone who fits this description we’d be happy to have a chat with them.

Thank you for visiting www.ennova.ca

The recruiting industry has always been lucrative. With 35% of a recruited individual’s annual salary as a typical fee it certainly paid well. Except there’s a new kid in town and he’s good and much cheaper.

To understand the disruption you first need to understand the basics of the recruiting industry. It’s fundamentally an arbitrage play. Recruiters typically have deep relationships in either an industry sector, (e.g. manufacturing) or a functional area (e.g CEOs).

They use these assets to find the right person for the job – their core value proposition. While they perform many valuable activities along the way: Job posting, advertising, screening, interviewing, etc., it’s their ability to FIND the right candidates to put through the process that people are paying for. And that’s based on experience and relationships and networks. The best of the best always had the right connections and networks and that’s what you paid for. Hence the “pay a percentage salary” versus paying for time spent.

But what is LinkedIn but a network of relationships of 40 million professionals around the world? And for a measly $500 per month you can have access to them all. And what’ s even better, the recommendations on each profile are real. They can’t be faked. So, combine access to the information of 40 million professionals, inexpensive geo-targeting ads, with an ability to read and follow-up on recommendations and you have not only replicated the recruiters network, you’ve taken it to a whole new level.

Take this asset and put it in the hands of a former HR professional and magic occurs. The revenue models are changing to a time based fee versus access to the network base fee. And with fees 1/3 to 2/3 less than what traditional recruiters charge serious disruption is going on. Add that to a recessionary economy and now is not a good time for recruiters to say the least.  They are being commoditized.  How will they escape?

So what lessons can we learn?

• Social networking sites are huge repositories of personal and professional information. (no kidding)
• Prior to these social networks, industries had high costs to access specific types of this information and so their revenue models reflected that. (Recruiting and professional experience and recommendations)
• With cheap access to this information on a massive scale, new much cheaper revenue models become available, disrupting the old industries.

So what does the future bring?

Here is another industry that this massive information storage could disrupt. Personal behavioral information and the personal insurance industry.

What other industries do you think could be disrupted based on access to previously expensive information about people?

Thanks for visiting http://ennova.ca