In this article
- What Makes an Industry Ripe for Disruption?
- What Are the Five Signs of Disruption?
- What Does Breaking a Convergent Orthodoxy Look Like?
- Why Is Customer Frustration a Warning Sign?
- How Do You Calculate the Disruption Readiness Score?
- What Should You Do If Your Score Is High?
- Frequently Asked Questions
- About the Author
What Makes an Industry Ripe for Disruption?
An industry is ripe for disruption when everyone follows the same unwritten rules and customers are paying for those rules without getting value from them. The five signs are competitive convergence, customer frustration, technology shifts, new entrants and regulatory change. The more that are present, the closer someone is to breaking the rules.
Underneath every sign is an orthodoxy: a belief the whole industry treats as permanent truth. Stagnation Assassin defines orthodoxies as temporary equilibriums masquerading as eternal truths. They persist not because they are correct but because everyone believes they are. The concept is explained in what an industry orthodoxy is.
What Are the Five Signs of Disruption?
The five signs are competitors who look identical, customers who complain about the same things everywhere, technology that makes old constraints optional, new entrants who ignore your rules and regulation that changes what is allowed. Each one creates an opening for whoever is first to stop following the industry script.
- Competitive convergence. Products, pricing and messaging look the same across competitors, so nobody is really competing.
- Customer frustration. Customers tolerate pain points as “just how the industry works.”
- Technology shifts. Capabilities that change the cost or speed of the core offer are available, but incumbents have not used them.
- New entrants. Outsiders enter without your assumptions and are dismissed as not understanding the business.
- Regulatory flux. Rules that protected the current model are changing.
What Does Breaking a Convergent Orthodoxy Look Like?
It looks like questioning the rule everyone prices around. In the Refrigeration division, every competitor charged a premium for stainless steel, and pricing consultants and market research agreed. When we checked the cost, the total incremental cost was $31 per unit for a $200 price difference.
We broke the orthodoxy in Week 8 by offering stainless at the same price as colors during promotions. Sales of stainless rose, total units beat the old promotions and the mix shifted almost entirely to the profitable stainless units. Competitors kept their premiums for fourteen months before matching, by which time we had captured eight points of market share at that price point.
Orthodoxies are temporary equilibriums masquerading as eternal truths.
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Symptoms tell you something’s wrong. The cause is usually deeper. My free Stagnation Genome worksheet walks you through five genes and 25 indicators, so you can see what’s actually driving your team.
Why Is Customer Frustration a Warning Sign?
Because frustrated customers are waiting for someone to fix the problem, and they will switch to whoever does. Customers rarely tell you which orthodoxy to break. Watch what they struggle with and work around, because those compensating behaviors point at the rule that no longer serves them.
The Refrigeration division found its dispenser orthodoxy that way. Research into how people actually used the product showed 25 percent of dispenser owners never used them, meaning they paid for features they did not want. That insight led to the non-dispenser launch. Twenty questions for finding your own are in 20 questions to smash orthodoxies.
How Do You Calculate the Disruption Readiness Score?
Rate each of the five signs from 1 to 5 for your industry and add them up for a score between 5 and 25. 20 to 25 is critical and needs immediate action, 15 to 19 is high, 10 to 14 is moderate and 5 to 9 is low.
A high score is both a threat and an opportunity. If you do not challenge the orthodoxies creating your industry’s vulnerability, someone else will. The question is whether you drive the disruption or absorb it.
Every industry operates under unwritten rules that everyone follows without questioning.
What Should You Do If Your Score Is High?
List the orthodoxies behind your highest-scoring signs, test the cost and customer facts behind each one and pick the one that would hurt competitors most to copy. Then break it with a small, fast test rather than a strategy study. Speed matters, because competitors will eventually match you.
Expect incumbents to call you insane. Refrigeration competitors said we were “racing to the bottom,” then matched us fourteen months later. How rivals typically react is covered in how competitors respond to disruption.
Frequently Asked Questions
What are the signs an industry is ripe for disruption?
Competitive convergence, customer frustration, technology shifts, new entrants and regulatory change.
What is the Disruption Readiness Score?
A 5 to 25 total from rating each of the five signs 1 to 5. 20 to 25 is critical, 15 to 19 high, 10 to 14 moderate and 5 to 9 low.
What is an industry orthodoxy?
An unwritten rule everyone in an industry follows without questioning, a temporary equilibrium treated as permanent truth.
Can an incumbent disrupt its own industry?
Yes, by breaking an orthodoxy before competitors do, as the Refrigeration division did with stainless steel pricing.
How do you find the orthodoxy to break?
Look at customer compensating behaviors and test the cost facts behind rules everyone accepts.
Someone is going to break your industry’s rules. It should be you. I help leadership teams find and smash the orthodoxies holding them back. Book me to speak to your team, or get the full orthodoxy method in Stagnation Assassin.
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If this was useful, read Chapter 1 of Stagnation Assassin free. You’ll get the five stagnation genes, the Ten Warning Signs assessment and the 90-Day Question.
About the Author
Todd Hagopian is a business transformation author and VP of Product Strategy and Marketing. Known as The Stagnation Assassin, he has led turnarounds across his corporate career, including roles at Berkshire Hathaway, Illinois Tool Works and Whirlpool, and his transformation work has created $3B+ shareholder value across five turnarounds. He is the author of Stagnation Assassin. Invite him to your event through his speaking page or connect on LinkedIn.