Mark Bouris: Disruptive ploys

A few weeks back, I was invited to give a speech to a group of postgraduate candidates at the Australian School of Business at the University of NSW. I spoke about something I learned a long time ago, which has helped me to build every business I’ve been involved in – a disruptive business model.

The concept behind a disruptive business model is fairly simple. It’s one that can be applied in any discipline that takes a product or service and delivers it to the mass market at an affordable price.

In 1908, Henry Ford developed the Ford Model T. Before then, cars simply weren’t accessible to the general public. So it didn’t matter that someone had invented a petrol engine to take the place of the horse and buggy because no one had access to automotive vehicles and no one could afford them. The Ford Model T is regarded as the first motor vehicle to make car transport possible for the American middle class.

Many of the companies I am involved in operate based on disruptive business models and my company, Yellow Brick Road, was founded on this very discipline. The vision is to make quality financial advice available to all Australians, not just the privileged segment. It used to be that only the rich had access to financial planners who could give advice on how to plan properly for the future. To get access to these types of professionals, you had to go to the big cities to find them.

Today this concept has changed. Now there are advisers in the suburbs and in growing communities where people need advice the most. The game changed because the established model for financial services was disrupted.

Disruptive business models make it possible for smaller companies to take market share away from the leading players. I’ve written about David and Goliath, where the disruptive business model is the arrow in the Achilles heel of category dominators. It’s one of the only ways to compete with big businesses and make money in the process.

In the mid-1990s, when I built Wizard Home Loans, we operated on a disruptive business model and made mortgages accessible and affordable to the middle class by bringing margins down by half to deliver the lowest rates in 40 years.

Wizard, along with other non-bank lenders, changed the game and through that model we wrested 5 per cent market share off the big banks. When you’re competing with the most profitable banks in the world, it’s a pretty impressive feat. Even more, it’s proof the model works.

Disruptive business models can be applied to any company or market sector. I am involved in a US-based company called TZ that operates based on a disruptive business model by developing sophisticated technology and applying it to create solutions that enhance people’s everyday lives.

Finance and technology are the sectors to which I’ve applied the model but there are hundreds of others. The internet is based on a disruptive business model, as is the Australian School of Business. It can be anything that takes something once limited in accessibility and makes it obtainable for the masses.

A disruptive business model is what entrepreneurial activity is all about – creating something unique that no one else has thought of. Disruptive business models are nothing new; they’ve been around for hundreds of years. But it’s the way the model is applied that makes it new every time. And that is what successful businesses are all about. Finding a way to do things differently and bringing something unique to the market.

Given the way the world is working today, to be successful you have to drive the disruption. It simply isn’t enough to be better, faster or smarter. You have to do something that drives real change.

Today, we are living in a much more difficult, sophisticated and competitive environment and to thrive you have to learn to be disruptive in your thinking and surround yourself with people who adopt the same mentality.

Not everyone has to own a company with a disruptive business model, you can apply disruption as an employee or even in your everyday life. Everyone has an opportunity to make a difference and that’s what it all comes down to. If you don’t dare to be different, I guarantee there is someone out there who will.

BRW

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