Whilst I’m still in a mood about my recent cancellation of what little relationship I had with my old employer it’s probably worthwhile talking about why I have such an interest in this.
Previous readers will know I work in IT. I’m also deeply into new tech and digital (I work for a huge telecommunications company)
And sat here last night getting over the break up of my relationship with my car insurer I wondered what would happen to the ‘big boys’ of insurance today if their market was disrupted from a new competitor who didn’t do insurance in the way we expect or see it being done now.
Disrupters are part and parcel of the technology sector. You can’t click on a link to a tech news website without seeing the latest start up who is disrupting whatever market they are about to deploy into. Kickstarter is full of start ups promising to change the way we do x or how we use y.
If you look at the recent news about Uber and the impact they are having on the travel sector you can see what real disruption looks like. If you are a customer it’s great. It’s digital, it’s app based, it’s normally far more efficient than what you currently use and the chances are it comes in at a price that undercuts the existing competition. It’s a win win for us as consumers
If you are one of the companies who have just discovered your market is being disrupted than the opposite is true. It’s as scary as hell. Your existing monopoly on consumers can literally disappear before your eyes.
A further problem for these disrupted companies is that they are normally large, normally operating on legacy systems and processors and normally adverse to rapid and sustainable change to keep pace with disrupters in their sector.
For the disruptors this is fantastic news as it means not only do they get to take a slice out of existing competitors customer share, but also keep them for months or even years before the competition realises the threat and starts to put together anything resembling the disruptors technology or processes. And nine times out of ten the old players in the market will simply try (and fail) to copy what the disruptors has done, finding along the way that it’s now incredibly difficult to claim back that lost slice of customers.
The response to this realisation is normally threefold
1) the disrupted companies try to introduce a different way of rapidly introducing ‘digital’ changes to their customers. Normally focusing on app style technology. These rapid deliveries tend to be on the most part extremely rushed, buggy and don’t address the key benefits the disruptor offers consumers over the existing legacy companies.
2) the disrupted companies try to compete on their existing platforms using their ‘brand’ or ‘prestige’ to try to hold onto customers. The ‘head in the sand’ approach works for some customers who may be nervous of using smaller start up style companies products but it still doesn’t address the fundamental problem of a disruptor moving the goalposts
3) the disrupted companies throw their toys out the pram and use legal avenues or regulatory bodies to try and ‘lock out’ the disruptor from their market and customers
Don’t believe me?
Disrupts the taxi sector.
Sees huge demand for its service, rapidly expands across national and international markets, completely changes the way consumers can book travel.
Now taxi companies have a number of options.
1) they could provide technology that matches the wants and needs of their customers (it still amazes me that the majority of black cabs don’t take card as payment – especially when we are becoming a cashless country)
2) they could try and out perform and outpace the disruptor (in this case Uber). Which is unlikely where a large, well funded disruptor enters the market
3) they can spit their dummy out and take the disruptor to court
What one do you think happened in Uber’s case?
Rather than try and ensure they deliver the evolving wants and needs of their customer base they decide to go after the disrupting influence and throw mud at them in the hope some sticks.
So in the UK we’ve heard how Uber drivers aren’t security checked, don’t have as many background checks as licensed cabbies, overcharge and don’t have as much knowledge as ‘genuine’ taxi drivers.
All complete rubbish. Uber drivers have to go through a number of checks, more so than me and you holding a driving license. They also have technology black cab drivers don’t that ensures the customer and the driver agree the price up front (being transparent) and map technology that ensures the quickest route is always made clear to customer and driver.
Uber have successfully disrupted the taxi business.
And more importantly the consumers agree. Uber is undergoing rapid expansion across the UK. Customers fell on the side of Uber in recent court action which London Transport soon realised.
So why am I talking about taxi companies when I was thinking about car insurance?
Well, imagine an Uber entering the car insurance market. With cutting edge technology and data supporting it. Fail fast approaches and a genuine effort to make the customer interaction smarter and more cost effective for company and consumer. Just think how quickly the car insurance market would be disrupted?
What if it wasn’t Uber? What if it was Google?
If I was a car insurance company in the UK I’d be worried today. Because it won’t take long for disruption to come, and when it does it’s going to put Uber annoying black cab drivers completely in the shade.