From reinventing processes to marketing brilliance, what can leaders learn from the most groundbreaking businesses of our time?
From reinventing processes to marketing brilliance, what can leaders learn from the most groundbreaking businesses of our time?
Think of a disruptive business and which company springs to mind? Possibly Google, Apple or Amazon – and for good reason. Today, it’s hard to imagine a world without internet search, smartphones or online shopping: all major market disruptions that these tech giants helped to pioneer. Yet despite their long histories of disruption – or perhaps because of them – many people would no longer regard this trio of companies as disruptors, instead seeing them as established market players.
So, which other businesses are having the most disruptive impact on the world today? This is the question I explored in The Disruptors, a collection of 15 case studies that examines the business models of some well-known organizations, looking at how they defied the norm to achieve outstanding success. Their rise to the top of the business world offers useful lessons for leaders looking to disrupt their own marketplace. Here are four of the most intriguing stories.
Crocs – a love or hate brand
In 2002, three friends from Colorado bought the rights to manufacture a line of foam-based boating clogs that they named Crocs, an abbreviation of crocodile. The trio of entrepreneurs had spotted some similarities between their product and the reptile: both were comfortable on land and in the water, strong and long-living.
Crocs quickly took off because people liked the loose fit of the shoes and the fact they could be easily cleaned. But no one tried to pretend that Crocs were attractive – not even the founding entrepreneurs. As it turned out, the secret sauce behind the brand’s success was its ability to turn this apparent disadvantage into a selling point. It used the shoes’ quirky appearance as a powerful differentiator in the marketplace, adopting the strapline ‘Ugly Can Be Beautiful’ in its advertising.
Today, more than two decades after they were first launched, Crocs are firmly established as an iconic brand. Thanks to their usefulness, they appeal to a broad range of people and are suitable for a wide variety of purposes from boating and fishing, through to working in hospitality and warehouses. By continually reinventing themselves through headline-grabbing collaborations with designers and celebrities, Crocs have also remained a fixture of popular culture.
Despite their widespread popularity, some consumers still view Crocs as an affront to good taste. But this is no bad thing from an awareness perspective, according to digital marketing expert Clara Kelly, since it means the brand is talked about. “Love or hate brands get a lot of traction,” she says. “More than a brand people just like.”
Certainly, Crocs shoes have a loyal community of fans, which is growing all the time due to the brand’s social media engagement and clever marketing strategies. As an example, it hosts a regular ‘Croctober’ celebration, introducing a special style to mark the month of October. In 2023, this special style was the eye-catching Crocs Classic Cowboy Boot, complete with spurs. Predictably, the boot was loved by some and hated by others.
OpenAI – leading the AI revolution
Research lab OpenAI became a household name in November 2022 when it unveiled the revolutionary, free-to-use chatbot, ChatGPT. Just two months after its launch, ChatGPT had an estimated 100 million monthly users, making it the fastest-growing application in history, according to UBS.
ChatGPT sparked an explosion of interest in generative AI models. These tools are set to transform our world and affect jobs in a wide range of industries, including accounting, engineering, journalism, IT and law. While companies are still experimenting with use cases for different generative AI technologies, there is an ongoing debate around the tools, which present a wide range of risks from bias and breach of copyright, through to presenting false information as fact.
Amid the unfolding generative AI revolution, it’s no accident that OpenAI is arguably the most influential organization in the space – if not on the planet. The non-profit lab, which has a for-profit subsidiary, has received substantial backing from a group of wealthy and powerful individuals and organizations since it was founded in 2015. Among these is Microsoft, with whom OpenAI has an important strategic partnership.
But while robust financial support has been critical to OpenAI’s success, another key factor has been its powerful mission and vision for the future: to create safe artificial general intelligence that benefits all of humanity. The ethical nature of that mission captures the imagination of potential employees, helping the lab to attract talented people who want to make a positive difference to the world.
OpenAI tries to cultivate a collaborative, egalitarian, transparent culture, enabling its people to perform at their best. Diane Yoon, the lab’s vice-president for people, said that employees from different teams are expected to do a lot of “cross-pollination” in the office cafeteria, discussing research papers and techniques.
With so many bright minds trying to achieve groundbreaking things, it’s perhaps inevitable that tensions should occasionally erupt. During a week of high drama in November 2023, OpenAI’s board unexpectedly dismissed its high-profile chief executive, Sam Altman. Media reports suggested that Altman was seen by the board to be compromising human safety by rapidly commercializing AI products. While Altman was reinstated, the subsequent departure of the lab’s chief scientist, Ilya Sutskever, points to continued differences of opinion within the organization over how it should achieve its objectives.
In the long run, OpenAI’s success will surely rest on how it reconciles its ethical mission with commercial pressures, and how it accommodates diversity of thought.
Tesla – reinventing electric cars
On the face of it, Tesla’s achievements can seem
like a foregone conclusion. Given the existential threat of climate change, the world needed to transition to a lower-carbon economy. So, it’s obvious we have to make the large-scale shift to electric vehicles, right?
Well, it wasn’t so obvious back in 2004 when serial entrepreneur Elon Musk first invested in a fledgling electronic car company called Tesla. The company – named after the late Serbian-American engineer Nikola Tesla – had a vision of building an entirely electric sports car called the Roadster.
Musk, who became Tesla’s chief executive in 2008, later explained that he funded the company because he wanted to “help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy.” Nevertheless, he also noted that at the time the business was founded, “people thought electric cars were the stupidest thing ever, bad in every way.” Back then, electric cars were perceived as ugly, slow and hampered by a low driving range.
From the outset, Tesla’s strategy was to make sexy electric cars, introducing more and more affordable models over time, until it ended up as a mass-market brand. It has been able to deliver on that strategy by following several key principles.
Firstly, Musk believes strongly in connecting design with engineering. This has helped the company to achieve the high industrial design standards that Tesla is known for. Tesla also adopts the concept of ‘first principles’ when it comes to its design and engineering processes. “You boil things down to the most fundamental truths and say: ‘what are we as sure as possible is true?’ and then reason up from there,” Musk has explained. In other words, approach problems without pre-existing ideas.
Other key principles applied at Tesla include questioning every requirement to ascertain whether it really is valid, removing unnecessary elements of processes, simplifying and optimizing as much as possible, speeding up workflows, and automating – but only after questioning requirements and removing unnecessary tasks.
Tesla is also known for embracing vertical integration, where a company effectively owns its supply chain instead of sourcing components from different suppliers. Indeed, Musk has described the firm as being “absurdly vertically integrated compared to other auto companies.” A vertically integrated approach enables Tesla to effectively manage its production process, reduce its dependency on external suppliers, lower its production costs, and respond rapidly to changes in the market.
TikTok – the algorithmic advantage
Short-form video service TikTok is a cultural phenomenon and one of the world’s most popular apps, with more than 1.7 billion users. It was launched in China in 2016 by its owner, ByteDance, under the name Douyin. Despite being a late entrant to the crowded social media market, TikTok enjoyed exponential growth within its first few years. Its popularity further accelerated during the Covid-19 pandemic, when lockdowns meant people were stuck at home looking for entertainment.
What are the secrets to TikTok’s success? For starters, it has effectively democratized the business of entertainment. Blake Chandlee, president of global business solutions at ByteDance/TikTok, describes the app as an “entertainment platform that’s driven by community.” The platform is home to a vast range of authentic and engaging content – most of which has been created by people who are neither celebrities nor influencers, but who just want to entertain others. TikTok makes it very easy for would-be entertainers to create a steady supply of new and interesting videos by including editing tools within the app. It is also continually adding new features.
Notably, TikTok offers several monetization tools that enable creators to make money from the platform. A good example is TikTok Live, a livestreaming service that allows users to send virtual gifts to creators that can then be converted into cash.
Content only drives loyalty if it is shown to the right people, at the right time, however. TikTok’s powerful recommendation algorithm learns users’ interests from their viewing habits and makes compelling, personalized recommendations. Videos that attract high levels of engagement – such as likes, shares and watch time – are pushed out to other users who have similar interests. The algorithm’s effectiveness at keeping users hooked helps to explain why TikTok has been described as “dangerously addictive” by The Washington Post.
Dr Alessia Paccagnini, associate professor at the University College Dublin School of Business in Ireland, believes that in future TikTok is likely to use AI to create “even more finely tuned, user-specific content streams.” She predicts growth in the e-commerce space, with TikTok well-positioned to disrupt traditional online retail models by offering “a more seamless, integrated shopping experience directly within the app.”
TikTok’s long-term success will also rest on its ability to assuage concerns that it poses a security threat due to possible connections with the Chinese government. It is fighting for its survival in the US, where politicians have voted in favor of the app being banned unless ByteDance sells its controlling stake.
Problem solvers
No two disruptive businesses are ever identical
in their approach. They each have their own processes and strategies, serve the market in unique ways, and develop bespoke solutions to the challenges they face. But while their business models may vary, what disruptors have in common is a staunch commitment to addressing a problem, whether that’s developing a waterproof shoe or making electric cars available to the masses. By solving those problems, they are helping to change our world.
Sally Percy is a business journalist and author of The Disruptors: How 15 Successful Businesses Defied the Norm (Kogan Page)