Does anyone have a disruptive design?
Google led me to stumble across this provocative post by John Sviokla on the Harvard Business site. In it, he focuses on the idea of disruptive business design, and that "the minimum efficient scale of doing fantastic things is getting orders of magnitude lower in some industries." Basically, how do you create a company that, like Craig's List, say, so turns an industry on its head that you can do things like clear $1,000,000 per employee in profit? In some ways, the security industry has done this once not that long ago, when the mass marketing alarm companies started giving away alarm systems so that they could reap the recurring revenue - just like Craig's list gave away advertising for everything but jobs so it could steal all the classifieds away from the major newspapers. Of course, the hey day of the mass marketers may have come to an end as the general public seems to have basically decided it's okay to pay a little more up front if it means better service and support on the back end. The industry has not drastically coalesced, as many predicted, and while ADT remains a giant gorilla of a company, there remain thousands of mom-and-pop alarm companies who do alright for themselves. But Sviokla raises the question, "Imagine a security company that was truly designed around the inexpensive, internet connected, monitoring equipment available today." What would that company look like, and does it already exist? To what "monitoring equipment" is he referring? Is there something that would allow alarm companies to go forward at "a fraction of the cost to deliver the same services"? Well, what do security companies have for costs? The overhead of the central station and the operators (or the margin that must be shared with a third party); the installing technicians, their salaries, and the trucks that ferry them around; and maybe marketing? And, if they're essentially giving away the system (or leasing it, whatever), there is the cost of the equipment, itself, which is most often referred to as financing growth. However, many of the most profitable installation companies say they at least break even on every installation. I don't know if that's true or not. Say it is. Then what's left to cut? Basically, it's the installers and their trucks. With the advent of reliable wireless connectivity, both for monitoring and for in-the-house sensors, isn't it true that self installation is pretty possible? The thing is, uControl is already trying that. And before they got very far down the road, they instituted a dealer program and created a channel that's not direct-to-end user. Plus, the New York Times has already declared that DIY residential alarm systems are easy-peasy, yet I've hardly seen a rush of homeowners bypassing the traditional alarm industry. I haven't heard a single alarm company owner complain of the competition that DIY systems present. So, is there a disruptive design out there? Have you done one of these cool fiercest competitor workshops that Sviokla references and foreseen a future where the current business model is stood on its head? Does the "free" video verification proposed by Videofied represent a significantly different paradigm? Is there an equivalent in the commercial installation marketplace? Even better, who are the talented individuals who might come up with this disruptive business model? Are they inside the industry now, or will they come from the outside, IT or elsewhere? Are they working at your company right now, but you don't listen to them because their ideas are crazy?