Why Disruptions Favor Emerging Trends & Brands

Walker SmithJuly 30, 20204 min

When marketplace disruptions are far-reaching and radical, conventional ways of doing business are swept aside, clearing the way for emerging trends and small yet burgeoning brands to accelerate into an enduring and sometimes dominant mainstream position. This is the principle of acceleration.

Marketplace change is not always incremental or slow to catch on. Sometimes, change happens all at once in what seems like, and often is, the blink of an eye. But the hallmark of acceleration is not that it happens in one fell swoop. Rather, it is the occurrence of a dramatic and deep-seated disruption that knocks the marketplace out of its grooves, thus necessitating a new model for business success.

Instances of wholesale change in the marketplace are infrequent but not unknown. Typically, disruptions are followed by little change, not lots, because familiar comforts and habitual routines are hard for people to abandon, as is clear from the past experience informing the principles of New Value and Asymmetry. Yet some disruptions bring so much upheaval and transformation that old business models can’t keep up or get pushed aside. Existing processes and practices are supplanted by things that were making inroads already and which can now grow at an accelerated pace.

Accelerated Change, Accelerated Opportunity

During any economic downturn or period of turbulence, operating inefficiencies, debt-laden balance sheets, limited reserves or lines of credit, and small, easily squeezed profit margins become punishing burdens. During major disruptions, these pressures are compounded by added turmoil that destabilizes the footing and structure of the marketplace. Fundamental disruptions usher in drastic change by compromising the viability and productivity of existing business models (rather than simply exposing the under-performance or operating weaknesses of companies that are based on an otherwise sound business model). Barriers to entry are removed or rendered ineffective. Consumers are able to — and often forced to — experiment with alternative options that many people wind up liking better than what they used or bought before. Incumbent brands lose relevance and value. Most importantly, consumer wants and needs transition faster than established brands can adapt. Consumer preferences shift in directions that entrenched market leaders are unable or unwilling to go. In moments such as these, prevailing business models give way as the marketplace opens up and nascent change is accelerated.

The principle of acceleration has been evident in a handful of important ways during the coronavirus pandemic, e-commerce in particular. The public health lockdowns of March and April shuttered brick-and-mortar stores and confined consumers at home. As a result, online shopping spiked. Even though some of this will revert back when the pandemic subsides, the shift to e-commerce that was emerging already has been able to leap forward in a step change, particularly in categories that had experienced little impact from online shopping in the past.

The growing interest in brands of local provenance has also gained momentum because of the pandemic. Pressure on globalism was intensifying before the pandemic from pushback about jobs losses due to free trade, opposition to cross-border flows of people, and concerns about the environmental and cultural consequences of global supply chains. Around the world, nationalism was gaining strength. Locally sourced brands and craft-oriented products were making inroads into many different categories. A maker culture had taken root. The pandemic kicked this local trend into higher gear. The resilience and security of global supply chains has been called into question. Borders have been locked down to stem the flow of the coronavirus. Public sentiment has swung even more strongly away from brands without a local or at least a national pedigree. As a result, local has accelerated.

Disruptive Factors Are Predictable

As the pandemic-fueled acceleration of e-commerce and local provenance illustrates, the trends and brands that get accelerated during a major disruption are present already. They were struggling to break through, but they had a position and some visibility in the marketplace. There is something there to accelerate. Every significant change that takes hold during a disruption is rooted in antecedent trends or brands.

Disruptions have antecedents, too, in the swings of fortune intrinsic to the broader economy such as recessions and technological innovations, or in erratically recurrent events like pandemics and terrorism (AKA: Black Swans). Disruptions are not predictable, but the pivotal factors underlying them can be identified and anticipated. It is the failure of contingency planning by incumbent brands that opens the door for emerging trends and brands to accelerate and transform the marketplace.

The Ultimate Disruption Of Our Times

Since the turn of the century, the marketplace has experienced three abrupt interruptions of business as usual — 9/11, the financial crisis and the coronavirus pandemic. But perhaps the biggest disruption over the past two decades has been the iPhone. Introduced by Apple in 2007, the iPhone upended business models by pioneering the digital ecosystem of the smartphone that has dominated the commercial landscape ever since. Its impact has been progressive and evolving not all of a sudden in one fell swoop, and it did not come from nowhere. The iPhone had antecedents in customized wallpaper and ringtones for cell phones, handheld game consoles, apps for PDAs, the iPod, the iTunes store, and years of cutthroat competition among mobile software platforms.

There are many sorts and sizes of disruptions. Most do not upend the marketplace. But when big disruptive events put prevailing business models under pressure, incumbent brands must be prepared to adapt and change or else something new that was emerging already will gain traction and accelerate to replace them.

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