Reverse disruption is the process of redefining a company’s business model to reverse its fortunes and potentially being able to rebuild the business on top of the technology that disrupted or risked disrupting the business in the first place.
Understanding reverse disruption
To explain reverse disruption, consider the example of legacy companies Amazon and Walmart.
Walmart, on the other hand, was founded as a brick-and-mortar retailer and has had to adapt its existing infrastructure to become competitive online.
For a time, the fact that Amazon had the necessary infrastructure in place from the start meant it had a substantial advantage over Walmart.
But Walmart’s ability to not only adapt but ultimately beat Amazon at its own game is what we consider the essence of reverse disruption.
Walmart’s reverse disruption initiative
Walmart’s transformation into an online company started in 2016 with the acquisition of eCommerce start-up Jet.com for $3.3 billion.
The Jet website was discontinued in 2020, but it is widely believed that Walmart was more interested in Jet’s executive team and infrastructure.
To that end, former Jet CEO Marc Lore was President and CEO of Walmart U.S. eCommerce between 2016 and 2021. Under Lore’s tenure, Walmart invested billions in digital infrastructure.
To help customers choose the correct size of clothes online, for example, the company acquired the dynamic virtual fitting room platform Zeekit in 2021.
The technology, which offers an immersive and personalized experience, shows what the clothes will look like on various body shapes, skin tones, and hair colors.
It is also more convenient, with Amazon Prime members required to send unwanted items back to the company in the mail.
The company has also grown its curbside pickup and home delivery business, with the Express Delivery store-to-door service delivering products to customers’ homes in less than two hours.
With 90% of Americans living within 10 miles of a Walmart store, however, online growth has been primarily fuelled by the company’s click-and-collect service and diverse product range that makes it a “one-stop shop”.
Walmart is now the second largest eCommerce retailer in the United States with sales of $46.44 billion in 2021.
Other examples of reverse disruption
Here is another example of reverse disruption, this time for the entertainment company Disney.
Disney’s ability to remain relevant since it was founded in 1923 is thanks in part to reverse disruption.
When interest in classics such as Donald Duck and Mickey Mouse started to wane, the company transformed them into theatre productions and live-action films and beat established production companies at their own game.
Much later, when Disney acquired Marvel for $4 billion in 2009, some believed it overpaid for the entertainment company because the Spiderman, Fantastic Four, and X-Men franchises had already been licensed out to 20th Century Fox and Sony.
Other critics noted that Warner Bros had saturated the industry in the late 90s and early 2000s with its numerous Batman and Superman sequels Despite question marks over the viability of superhero action films, Disney found success with lesser known franchises such as Avengers, Captain America, Thor, and Iron Man.
Unlike Warner Bros, which released its superhero films as a series of near-identical sequels, Disney reinvented itself (and indeed the industry) with a host of new characters whose stories were told in multiple but interconnected franchises.
In true Disney fashion, the company also ensures that each character is monetized in as many ways as possible.
Not surprisingly, Warner Bros has since strived to imitate Disney’s disruption of the superhero film industry. But it has not attained the level of success it enjoyed at its peak two decades ago.
- Reverse disruption is the process of redefining a company’s business model to reverse its fortunes and potentially revolutionize or reimagine an industry.
- Walmart is now the second largest eCommerce player in the United States. This achievement required the company to abandon its bricks-and-mortar mindset and invest in online infrastructure and key personnel.
- Disney is another example of a company that has used reverse disruption at various points to remain relevant. It reinvented the somewhat stale superhero film industry – then characterized by stale, uninspired sequels – with new characters whose interconnected stories spanned multiple different franchises.