Why Disruptions Favor Rising Tendencies & Manufacturers
When market disruptions are widespread and radical, traditional business methods are pushed aside to clear the way for emerging trends and small but emerging brands to move to a permanent and sometimes dominant mainstream position. This is the principle of acceleration.
Market changes are not always incremental or noticeable only slowly. Sometimes a change happens all at once in what appears to be, and often is, the blink of an eye. However, the hallmark of acceleration is not that it takes place in one fell swoop. Rather, it is the appearance of a dramatic and profound disruption that knocks the market out of joint and thus requires a new model for business success.
Cases of wholesale changes in the market are rare but not unknown. Typically, disruptions are followed by little change, not many, because familiar conveniences and habitual routines are difficult for people to give up, as evidenced by past experiences that inform the principles of new value and asymmetry. However, some disruptions bring about so many upheavals and changes that old business models cannot keep up or be pushed aside. Existing processes and practices are being replaced by things that have already moved in and can now grow faster.
Accelerated change, accelerated opportunity
During an economic downturn or a period of turmoil, operational inefficiencies, debt-laden balance sheets, limited reserves or lines of credit, and small, easily squeezed profit margins become punitive charges. In the event of major disruptions, this pressure is exacerbated by additional turbulence that destabilizes the foundation and structure of the market. Fundamental disruptions lead to drastic changes by affecting the profitability and productivity of existing business models (instead of just revealing weaknesses or weaknesses in companies that are based on an otherwise solid business model). Entry barriers are removed or rendered ineffective. Consumers are able – and often forced – to experiment with alternative options that many people like better than what they used or bought previously. Established brands lose relevance and value. Most importantly, consumer desires and needs pass faster than established brands can adapt. Consumer preferences are shifting in directions that established market leaders cannot or will not go. At such moments, the prevailing business models give way when the market opens up and the emerging change is accelerated.
The principle of acceleration has emerged in a handful of important ways during the coronavirus pandemic, particularly e-commerce. The blockade of public health in March and April closed brick-and-mortar stores and locked consumers at home. As a result, online shopping increased. Even if part of it will go down when the pandemic subsides, the looming shift to e-commerce has already progressed, especially in categories that have had little impact on online shopping in the past.
The growing interest in brands of local origin has also gained momentum due to the pandemic. The pressure on globalism increased before the pandemic due to the setback in job losses due to free trade, opposition to the flow of people across borders, and concerns about the environmental and cultural impact of global supply chains. Nationalism grew in strength all over the world. Local brands and handicraft products penetrated into many different categories. A maker culture had taken root. The pandemic has fueled this local trend. The resilience and security of global supply chains has been questioned. The borders were blocked to limit the flow of the coronavirus. The public mood has turned away even more from brands without a local or at least national family tree. As a result, has accelerated locally.
Disruptive factors are predictable
As the pandemic-related acceleration of e-commerce and local origins shows, the trends and brands that are accelerating during a major disruption already exist. They struggled to assert themselves, but they had a position and some visibility in the market. There is something to speed up. Every significant change that occurs during a disruption is rooted in previous trends or brands.
Disruptions also have harbingers of the fluctuations in happiness inherent in the economy as a whole, such as recessions and technological innovations, or in irregular recurring events such as pandemics and terrorism (AKA: Black Swans). Disruptions are unpredictable, but the key factors underlying them can be identified and anticipated. It is the failure of contingency planning through established brands that opens the door to emerging trends and brands to accelerate and transform the market.
The ultimate disturbance of our time
Since the turn of the century, the market has seen three sudden disruptions to normal business operations – September 11th, the financial crisis and the coronavirus pandemic. But perhaps the biggest disruption in the past two decades has been the iPhone. The iPhone, launched by Apple in 2007, has improved business models by pioneering the smartphone's digital ecosystem, which has dominated the commercial landscape ever since. Its effect was progressive and did not suddenly develop, and it did not come out of nowhere. The iPhone had predecessors in custom wallpapers and ringtones for mobile phones, handheld game consoles, apps for PDAs, the iPod, the iTunes Store and years of crowding out between mobile software platforms.
There are many types and sizes of interference. Most don't bother the market. However, when major disruptive events put pressure on prevailing business models, established brands need to be willing to adapt and change, otherwise something that is already emerging will gain importance and accelerate to replace it.
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