Why you should never fight disruptive business models

This is a topic that keeps my thoughts occupied quite a lot, and a taxi ride that I took earlier today in the lovely city of Stockholm made me see the contrast between how existing markets deal with disruptive business models now and how they should behave in the ideal world. I’m talking about the on-going trend in which tech solutions stir up a well-established market. Focus moves from owning every aspect of the business to rather facilitating it, from being mass standardised to being mass customised, from global to local.

Disruptive business models

Let’s be a bit more concrete here, I’m referring to platforms like Uber, Alibaba & AirBNB. It’s quite curious to see how there’s companies growing immensely without having any inventory. In fact, Uber owns no cars, AirBNB has no real estate and Alibaba has no shop inventoy. All of them tend to be a facilitating platform, connecting many suppliers (of transportation, accommodation and shop inventory) to many customers, resulting in a mass customised product.  

The resistance

Now, here’s my annoyance - Mostly the well-established markets that are entered by these new business models are quite resistant. They act upon this resistance in legal ways, trying to get these new business models prohibited and stop losing their market share that way. For example, Uber POP has never really seen the light of day in The Netherlands. Resistance of existing taxi companies have ensured that private individuals are not allowed to drive people from A to B. Also, Amsterdam hotels are uniting against AirBNB to ensure the concept of renting out your own place to others becomes less easy, or even not allowed. 

The opportunity

For the last few days I’ve been in Stockholm giving trainings. During my stay there, I’ve encountered the heaviest snowfall this city experienced in over 100 years. Schools closed, people were stuck in traffic for many hours, public transportation stopped altogether and almost no taxis were available. The latter affected me, since I needed a taxi to get from the hotel to the office. After trying different requests in my Uber app, I finally got hold of a taxi coming to pick me up. The taxi driver, named Charlie, picked me up in his comfortable Lexus hybrid car. We talked for a bit and he told me he was running his own personal transportation company named L-Cab. He was one of the first taxi drivers I’ve ever heard telling that Uber actually gave him the business he needed to fill-up his low hours in which he had no bookings. Since I needed transport to the airport the day after, I made sure to book my trip with him immediately. One day later he came to pick me up, arrived earlier than booked and sent me a text that he would be waiting outside for me but could leave earlier to ensure my timely arrival. When I got in the car, I was surprised that there was a bottle of Taittinger champagne in a cooler in front of me and I was offered a glass of if right away.

And then it struck me - instead of resisting the disruptive business model of Uber, Charlie had the insight of actually upgrading his existing transportation product with a personalised service and more luxury. He embraced the Uber business model for exactly what it’s designed for: easy, quick and economic arrangement personal transportation. By taking on clients this way and impressing them with his friendly personality and service, he ensured business for his own -upgraded- transportation product. 

Bottom line, in my opinion well-established markets should embrace disruptive business models as a stimulans to improve their existing product rather than wasting energy on fighting them. Let’s learn from Charlie’s example. 

Do you want to discuss opportunities for your business by embracing disruptive models? Please don’t hesitate to reach out to me.