Blog 3: Being proactive against disruption

As I was reading through the articles for this week’s readings, I was intrigued by one of the topics that was mentioned in the Innovator’s dilemma. It read “Why good management can lead to failure?”. I was extremely confused at first, but I as read on, the article seemed to make more and more sense. I was especially fascinated about the “Sustained vs Disruptive Technologies”.

This past summer I had the opportunity to intern at Wayfair and as I read the article I could draw parallels between their business model and what the article talked about. Wayfair is the umbrella name that captures 5 different retail websites (Wayfair, Joss & Main, AllModern, BirchLane and DwellStudio). Each website caters to a style/segment of the market. For Example, Joss & Main was their low-cost furniture brand, while BirchLane focused on more traditional furniture and décor.

 I often wondered why they took the trouble to operate and maintain 5 different brands. Now, I believe this business model will help to preemptively prepare for any technology/trend that could disrupt the market.

Plan for disruption

For Instance, the Joss & Main brand is a “disruptive technology” that provides a more low-cost furniture option for consumers. But more importantly it could also compete against any future disruptive technologies that could enable production of cheaper home goods/furniture. One of the biggest advantages of operating with these multiple website business models is that it helps to harness one of the principles of disruptive technology, namely “Small markets don’t satisfy the growth needs of large companies”. By being versatile and operating in multiple markets they can achieve their required growth needs while being pro-active against any future disruptions that could arise.

However, one aspect that is worth noting is that by venturing into multiple markets there is a possibility of cannibalization of profits among the various brands.

Sustainable technology

While Wayfair is being proactive against any possible disruptive technology, they are also developing technologies that could add value to the products that they are selling. Rather, they are adding value to the mechanism through which they are selling their products. Their recent 3D image modelling technology enables you to visualize a furniture piece in your own home, to help select the best fit. This is a sustainable technology that could improve the overall performance of every product.

An interesting aspect that is very specific to Wayfair is that they are focused on a very narrow avenue of e-commerce (i.e home goods). This means that the only way for them to grow vertically is to keep expanding its base of operations by catering to all segments across the market.

The article illustrates the difficulty involved when an established organization (like Harley-Davidson) attempts to enter into an initially small market (small-bike value network). Therefore, I believe that the best methodology to achieve sustained growth is to expand the target customer portfolio right from an early stage. This could cannibalize sales internally in the short-run, but it is a calculated risk that organizations will have to take.

References

1. Christensen, C. M. (n.d.). The innovators dilemma: The revolutionary book that will change the way you do business.