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3 Ground Rules For Disrupting Any Industry

Are you brave enough to break away from the familiar and embrace change, even if it’s painful?

3 Ground Rules For Disrupting Any Industry
[Photo: Flickr user Antonio Morales García]

If you want to profoundly improve something, it’s often better and faster to start from the ground up.

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To find success you can’t rely on doing things the way they have always been done. It starts by studying the status quo and looking for the inefficiencies—usually the component that causes the most frustration, uses the most resources, or takes the most time. Then break it down completely so that you can start from scratch and put it back together in an entirely new way.

The opportunity to make real, impactful change only comes when you have the courage to part from the familiar and follow your vision. Here are three ways to do that:

1. Find The Core Problem And Fix It, Even If It Seems Impossible

My first job out of college was as an entry-level trainee at a brokerage house. I don’t think they expected much from me at this Wall Street job other than to do what I was told and collect a paycheck. But even though I was very green–or maybe because of it–I saw huge inefficiencies with how the business was run.

I was baffled and frustrated by how archaic and inefficient the financial markets and trading were. Everything was manual, information was tracked on paper, conflicts of interest were the norm, and information was hoarded and all too often used in ways that benefited the firm instead of the customer. To everyone else this was seen as both the cost of doing business, and how the business had always run. I knew things could be better.

So I left to start my first company with the goal of fixing trading from the ground up using technology. We sought to change the manual process of using paper tickets for trading and introduced a software system known as an order management system (OMS) to computerize the entire process.

With the introduction of the OMS, portfolio managers were able to input their buy and sell orders directly into a computer program that the trading desk could access, effectively eliminating those illegible paper tickets and providing a more efficient method of recording and monitoring trades. Today, the OMS is now adopted by just about every investment manager around the world.

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2. Ask Yourself What You Are Best At

Knowing yourself and your strengths will allow you focus on finding unique and lasting solutions.

When I started my second company, Liquidnet, a global trading network for institutional investors, I leveraged what I already knew about the trading process and how the OMS worked. I realized that if I could connect the information within each firms’s OMS, I could easily match large buyers and sellers of stocks, which would eliminate information leakage and adverse price movements that were impacting institutional investors.

Today, my company connects more than 800 leading asset managers together through technology in one large community, making us one of the largest agency-only brokers in the world. To eliminate unnecessary intermediaries, reduce information leakage, and ultimately produce better returns for the millions of people who invest in their funds, we looked at the problem that existed in a new way and solved it at its foundation. We leveraged our core strengths and put in place new technologies to make electronic institutional trading a reality.

3. Always Keep Sight Of The Long-term Goal And Its Lasting Impact

Fast, easy, or cheap bandage solutions are short-term wins often mired with long-term complications. Instead, by thinking creatively about how to organically grow the business and solve problems efficiently, a company can find transformational opportunities that often get missed.

To start, focus on finding one or two things that the customers are most concerned about or value the most, then leverage what you know to address the problem. A terrific example comes from Cemex, a Mexico-based building supplies company that used foresight to disrupt and transform what was a very low-tech and mundane cement industry.

Historically, construction companies were forced to purchase massive amounts of cement before a project began and keep it on site. This tied up enormous amounts of money and often resulted in either having too much or too little cement on hand. Cemex tackled this massive problem by taking some inspiration from the manufacturing industry.

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Through the use of technology, it implemented a just-in-time process for cement delivery, saving customers money and time. They no longer had to spend excess cash up front, and they could store just the right amount of material on the job.

By leveraging information technology and making smart strategic acquisitions along the way, Cemex became one of the world’s largest building materials suppliers and cement producers.

There are so many industries that are being disrupted and so many more that are waiting to be disrupted today. Every company or startup should focus on how they can best tackle their industry’s problems at the core and not be afraid to break things in order to make them better. This can help us find answers to some of our biggest problems, accelerate the pace of innovation, and yield a much more meaningful return.

Seth Merrin is an entrepreneur, global business leader, and philanthropist. As founder and CEO of Liquidnet, he has built a unique financial services company where nearly 800 of the world’s top asset managers come to execute their large block trades more efficiently across 43 markets around the world.

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