Disruptive Technology – A technology, that when implemented as a product or service, eliminates existing markets, creates new markets, and/or drastically modifies market(s) structure(s).
In the last couple of days I have seen a curious set of somewhat unrelated incidents that have caused me to wonder of I am not seeing the beginning of a trend.
While trying to get 22 things accomplished in the time it should take to get three things done (this is my usual time management technique) I stopped by the Deli in our local supermarket to pick up a few things before I headed home. The woman who worked there asked me if I had any recommendations as to where she might get a good deal on a new LCD monitor for her computer.
She is pretty “net-savvy” and had checked out some of the usual sites (Ebay, Buy.com, Overstock.com, etc.) looking for a deal but she thought I might know somewhere she hadn’t checked so she asked me for some recommendations. Coincidentally, when I got home a customer stopped by with a dead computer. After taking a quick look at it we determined that the hard drive had died and as the computer was a little over three years old it didn’t seem like a good idea to put any more money into it.
In both of the above cases I sent these people to one of my favorite resources, Techbargains.com. Techbargains is a site I check almost daily to see who has what for pricing on tech goods. To a lesser extent I also glance through FatWallet and a few other similar sites for this kind of information. I have found PriceWatch and Froogle to be a huge help on different occasions.
A little later in the day I got a call asking me to come up and deal with a few problems at an automobile dealership we service. While I was there dealing with a few “customer inflicted” computer issues one of the salesmen started complaining about a sale he had lost due to a customer who had researched the vehicle they were interested in buying on the net before they went to the dealership. Apparently, the customer had managed to get the vehicle’s dealer invoice off of the net and used that document to negotiate the price they were willing to pay on the vehicle – a price the salesperson was not willing to sell the truck at.
He then launched into a tirade about how Ebay was messing up the used car industry (I’m not sure anyone other than the industry themselves is too upset about that) because people could now go to one place and buy a used vehicle conveniently – oftentimes for about the same price he could buy these vehicles at the dealer’s auction for.
“If this keeps up I’m going to find myself out of a job!”
Out of the mouths of babes…
It seems to be commonly accepted that technology along with society as a whole are moving forward at ever-increasing speeds. This trend is likely to continue and even accelerate as the future advances. What does this mean? Is there any way we might be able to predict which industry will become the next buggy whip or electric typewriter to disappear in a relatively short timeframe?
What kind of effect will distinct industries see when the average Internet user has the ability to quickly, conveniently and easily gather whatever information they need about price and availability? What impact will this have on the Real Estate field as well as automotive, computer or any other consumer products?
Our economy is one now made up of service professions or put another way, people who will do things for us for a fee. What if the services these people provide become obsolete because their customer can now do the jobs themselves with very little difficulty?
Let’s take a look at the Real Estate industry. What does a Real Estate Broker offer for their commission? From a buyer’s standpoint a Real Estate broker offers a selection of home to choose from, the ability to negotiate with the seller from a third party point of view as well as the ability to assist in the mountain of paperwork that buying a home entails.
From a seller’s perspective the Broker offers the ability to ascertain a realistic price for the dwelling as well as an infrastructure that allows the home to be showcased to a number of potential buyers. Once a client is interested the broker can assist the seller negotiating the best price for their home and wade through the necessary paperwork to make the deal go through.
In each of the above cases every single one of these services can be replaced by the Internet for significantly less cost to both the buyer and the seller. Yes, under the present system the buyer doesn’t “pay” the broker but there is a very real cost assumed by the buyer because the 6% commission is figured into the sale price of the home. It seems to be safe to assume that if the seller is willing to accept an offer of $100K (meaning that they will net $94K after paying the commission) the buyer probably could have bought that very same property for $94K if the broker hadn’t been involved.
As far as the paperwork is concerned there are certainly ways of automating that process. In fact, I’m sure most Real Estate offices as well as Attorneys have already done so.
If this is true, what does this say for the Real Estate Broker’s industry as it is currently thought of? What does this mean to the long term value of an established Real Estate Broker’s office? I don’t think it will take a crystal ball to draw some conclusions based on the above premises.
What about the New/Used automobile industry? Are there parallels to the Real Estate industry? I think there definitely is. As the big three US automobile makers are starting to really hurt (starting to?) they need to begin to question the value of keeping the traditional dealership open. (Actually, the automobile manufacturers need to question a lot more than just that but that is an entirely different rant.)
In the next decade many of the things we believed were unshakable will begin to disappear. The question will be who will be able to take advantage of these changes and who will get burned.
The reality is that it is through the mental exercises like these that we can try to interpret the signals we are being provided and form a plan as to how we should react.
It never was the strong that survived, it was those that had the ability to adapt.