Even before the acute financial crisis, high food and gas prices left consumers struggling to cut costs in everyday life. For instance, higher gas prices lead to an increase in home cooking, along with increased sales of cookbooks and semi-prepared foods in supermarkets.
The financial pressure on consumers has an interesting upside for disruption.
Consider for example a recent commercial from Target, entitled “Brand New Day.” The commercial suggests turning to new lower-cost, do-it-yourself ways to get old jobs done. For instance, the “new” commute is biking ($59.99), the “new” gym is a gym ball ($11.88), and the “new barber shop” is hair clippers ($14.99).
Of course, making things easier, cheaper, and more self-sufficient are classic disruptive themes. So all this begs the question: What do tough times mean for disruptive innovation?
Financial pressure translates into lower tolerance for being overshot on the part of consumers. If a consumer didn’t really need a certain product feature before, they certainly are not willing to pay for it now. At first blush this might seem grim for retail, but in the light of a disruptive lens, it actually highlights new opportunity.
People still need jobs done in their lives, and the company that provides them with a product to hire for that job, in the context of the current financial reality, will benefit. In this sense, this new environment could potentially be a nurturing foothold for the birth of new disruptive technologies, or for potentially disruptive existing innovations that have been waiting in the wings for their chance to thrive (think scooters, or consumer technologies for corporate IT).
What does this mean for firms today? It suggests that it may be fruitful to re-think portfolios of offerings and to consider old products that may be lying in an R&D warehouse, or that are on the market but have been de-emphasized. Formally stalled innovations could thrive in the new environment where the definition of “good enough” has changed, and would be low-hanging fruit for success.
Something to think about — instead of the fluctuations of the Dow.
