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In The Commoditization Of Everything, Adaptation Will Win

Lots of industries are becoming saturated with competitors, to the point where they’re becoming commoditized. My own industry, cloud storage, is a great example. The consumer or business looking for online storage now versus even one or two years ago can be paralyzed by options. As a startup that operates within this ecosystem, you’d think I’d be up all night.

I’m not.

A funny thing happens when an industry that was once nascent becomes the next big thing: Everyone thinks they can do your job. Goliath competitors get in the game. But it doesn’t signal the end for startups, despite popular belief. It’s a renaissance, a period of both rebirth and adaptation.

A week or so ago, I was listening to a piece on NPR about the democratization of air travel, and airlines’ non-responsiveness to travelers’ woes. Essentially, a few relative newcomer airlines like Virgin America (with its Red in-flight concierge) and Southwest (with fee-free baggage) have seen an opportunity to reinvent the experience of air travel, capitalizing on the frustrated passengers incumbent airlines have left in their wake (or prop-wash, if we’re going there). They took on Goliath airlines and are winning by being responsive, rather than just sticking to "the way it’s always been." Sure, a lot of processes are still quite flawed, but these are baby steps in the right direction.

Responsiveness to change is the number one advantage startups have over larger incumbents. The inertia required to get momentum started in a large company is often too great. Taking it back to high school physics, a body at rest tends to stay at rest. It sounds so simple, yet so few companies take time to adapt their product to deal head-on with what the public really wants. If every airline took this to heart, a lot more traveler gripes might be resolved, processes would be streamlined, and the whole experience of flying in general could be improved.

I’ve thought about this a lot, as more and more large companies creep into our territory every day. As Mark Suster says in this piece about what to do when a big company tries to eat your lunch, don’t be naive enough to think that a "big, dumb company" is trying to take over your territory. These companies certainly didn’t become big by being dumb. Just realize that your smaller stature makes you much faster and more nimble than them. In no area is this more evident than responsiveness.

It’s not always easy to turn on a dime, but it’s certainly worth it to adapt your product to what your customers are requesting. This customer-focused approach helps startups build something that’s grounded in what people actually want to use every day. It might take some time to rework what you’ve got, but I assure you it will be worth it when the volume of people using your product or service increases and word of mouth lights up your company like wildfire.

For startups and large companies competing in crowded industries, there will surely be a "survival of the fittest" epic battle playing out for everyone to see. As I’ve written in the past about "frenemies," you don’t always have to compete to the death to win in the startup game. You just have to be smart enough to know when and how to adapt. Here’s to a 2012 of adaptation and rebirth of industries people have written off as commoditized. My bet is that we’ll see a lot of innovation in these areas we never even expected as people fight to not only survive, but thrive.

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[Image: Flickr user Frank Vassen]