That innovators aren’t always treated fairly by market forces is an obvious lesson for those of us who grew up during the dot com boom of the late ’90s. Some ideas are just ahead of their time.
Consider Webvan, which pioneered online grocery delivery way back in 1999. Webvan’s innovations didn’t catch on 20 years ago because the market wasn’t big enough. There wasn’t a motivated customer base to scale because consumers were willing to grocery shop in person. Fast forward 20 years, and many of us used similar services during the pandemic. Today, companies like Shipt have gained major traction in this space.
There are five key indicators that a market is ripe for innovative ideas that will disrupt the market and be embraced in large enough numbers to sustain a customer base.
SLOW TO NON-EXISTENT INNOVATION
Any industry still doing things the same way after 100 years is ready for innovation.
For example, only recently has the process of buying a personal vehicle changed. A Scientific American article published in 1915 offers would-be car buyers a slew of tips for purchasing used inventory, dealing with car salesmen, and getting the best bang for your buck.
One hundred years later, buying a car is completely different. The process can be touchless without any haggling at the car dealership. Online vendors can even deliver a purchased vehicle to your home or office at a fixed price without any hidden costs.
UNHAPPY, RESTLESS CONSUMERS
Webvan’s Achilles heel may have been that there weren’t enough unhappy consumers seeking ways to ease the pain of the traditional shopping experience. That could have been the only difference between Webvan’s 2001 failure and the wildly successful, similar ventures of 2020.
The pandemic caused a real and immediate need for food delivery. And yet, even prior to the pandemic Shipt, Target, Uber, Walmart, and Amazon saw growing interest in fresh food delivery.
Former executives from Webvan landed at Amazon. In 2013, seeing the potential to reinvent online grocery shopping, they built Amazon’s online grocery delivery service, which was key to Amazon’s eventual acquisition of Whole Foods in 2017. That’s also when Target purchased Shipt for $550 million. The supermarket delivery industry was budding before the COVID-19 shutdowns, but the pandemic escalated adoption.
In 2020, consumers had a new mindset and needed something different, something disruptive. Back in 2001, that same urgency did not exist and despite the innovation, there weren’t enough people willing to change their shopping habits.
A NOTICEABLE LACK OF TECH ADOPTION
There isn’t an industry that hasn’t been fundamentally altered by this century’s technological advancements. For example, people were still taking paper and pencil tests in brick-and-mortar buildings before the pandemic. Even students in online classes were driving to testing centers to sit in rooms and take exams on paper.
According to the National Education Association, written exams became common fixtures in American education in the late 19th century. That’s more than 150 years of students working through paper tests with a face-to-face, in-person proctor.
While online proctoring existed a decade before the pandemic, it was widespread quarantine that pushed this industry toward mass adoption. Technology and education have gone hand-in-hand for many decades, but testing has been slow to adopt modernity.
Necessity forced tech adoption and innovation.
EXPENSIVE ENTRENCHED SOLUTIONS HAVE BECOME THE NORM
Business legal counsel is expensive. Attorneys spend years learning their profession and even longer specializing. Large corporations spend millions on legal services, but it’s tough for small companies and everyday citizens to keep up with laws.
Enter LegalZoom in 2001; it’s recognized by this publication [paywall] as one of 2012’s most innovative companies. Companies like LegalZoom introduced consumers to low, flat fees which challenged existing, entrenched offerings.
LegalZoom made getting legal expertise less expensive, which opened up an entirely new market.
A CLOSE-KNIT COTTAGE INDUSTRY
Sometimes industries are dominated by a small group of companies that have been in place for a long time. These customers are plagued by bloated costs for consulting, onboarding, training, or regulation. This means institutional buyers absorb the padded costs built into codified pricing models.
This was the case in the testing industry. A few niche companies had spent millions on testing infrastructure, buildings, and staff operating the testing centers. But in the early 2010s, online proctoring began to disrupt the marketplace by providing another option for taking an exam in a physical testing center. In these early years, there were only a handful of online proctoring providers, and most universities and certification bodies were accustomed to sending students to physical locations. As awareness increased about alternatives, so too did market share, driving product viability and revenue.
Then the testing industry endured the COVID era, and remote proctoring options were the only viable solution. This unintentional mass case study was evidence that online testing was fully viable and even preferred by test takers. Subsequently, organizations had a hard time telling people they could no longer test in the convenience of their own homes. Disruption had officially occurred and online proctoring was here to stay.
When there are competing companies in a limited market, they must innovate to differentiate themselves. In testing, there was a prime opportunity for disruption. Test-takers and administrators found remote testing to be more convenient, affordable, and seamless. Online students could complete their coursework and exams online instead of driving to a testing center. This migration was rapidly progressing before the pandemic, but was supercharged during the pandemic.
When looking to launch a business or innovate an existing one, start by considering where opportunity exists. Innovating in a market ripe for disruption is going to be more fruitful than innovating in a crowded market. A truly disruptive idea may seem impractical to some, but if these factors are present, stay true to your vision and keep innovating toward your goals.
Jarrod Morgan is the Founder & Chief Strategy Officer of Meazure Learning, the parent company of ProctorU.