Who was the last company that successfully out-designed Apple? The last company that out-overnighted FedEx? The last company that out-“everyday low prices” Walmart? The reality is that when a vendor pops up that outperforms a respected global business at what they do best, they are few and far between. It happens occasionally, but not often.
Why? Because it’s much more difficult to win a game when playing by the rules that the experts adhere to. It’s much easier to break the rules. The problem: too many builders expect to play by the same rules as everyone else. And when they do that they destin themselves for mediocrity.
To drive the point home, consider a more practical example. Let’s say you wake up stranded on a desert island. There is one, and only one way off the island; a bridge that will crumble after its first use. You’re there and Ussain Bolt is there. You know that whoever makes it to the bridge first just 150 meters away, will live. The other person won’t make it. Do you try to out sprint Ussain? Or do you step onto the conveniently located teleporter that will take you directly to the finish line?
Building businesses that can topple incumbents is all about playing by different rules. It requires building the teleporter. That’s the key to disruption, business model innovation, or any number of the buzz-words floating around the world of management these days. As someone setting out to do the impossible, you want to give yourself every possible advantage. You’ll never have the deep operational expertise and financial backing of the people you’re competing with -- so you need to ensure that the way in which you create value for customers is different than the way that others create value.
Often, competing differently requires walking away from valuable segments of the market. There was no way, for instance, that Amazon would have ever been able to provide the concierge experience that luxury shoppers required in the late 90’s. However, their virtually limitless selection enabled them to win the hearts and minds of budget shoppers and long-tail book lovers in a way that their incumbent competitors simply couldn’t match. For the race they entered, they broke the rules.
While we commonly associate this type of competition with digital disrupters, it’s not simply a byproduct of businesses native to the era of the Internet. Many industry stalwarts have carved their name in stone by doing things their peers believed unreasonable. Take the following list of companies that won their era by playing by different rules as an example:
- Apple - Deeply integrated software and hardware in an era where everyone was modular
- Southwest - Walked away from interstate travel to avoid federal regulation
- Toyota - Abandoned I-Beam based car chassis to lower costs for small vehicles
- Carmax - Ditched negotiated prices in a market defined by sleezy negotiations
- Netflix - Offered unlimited rentals while their competitors sold 3-day rentals, one at a time
- Dell - Determined that you didn’t need in-store distribution to sell an expensive computer
- AirBnB - Rents world’s largest number of hotel rooms, without owning a hotel
If you want to do something great, break the rules. Care excessively about adding customer value, but don’t worry about industry dogma.