Every once in a while, a new-age startup disrupts the established giants even though the giant has great management talent.
Why does this happen?
Often, it’s the “Innovator’s Dilemma” at play.
Here’s what trips incumbents:
1. They don’t invest in products outside what core customers want.
2. They shy away from areas where immediate revenue/profits aren’t clear.
Let’s break this down into three blind spots that incumbents often overlook:
1️⃣ Missing the Next Generation of Users: Sometimes, the disruption isn’t in the product itself but in how it’s delivered. Incumbents in B2C fintech focused on higher returns and relationship-building, as these were key differentiators. But younger users wanted sleek, effortless UX and hassle-free investing. Startups in neobanking and investment tech are winning by prioritising customer experience over traditional metrics. UX alone may not be a moat, but over time, it’s hard to compete with products that users love to engage with daily.
2️⃣ Missing a Key Trend: The rise of developer-first products is a classic example. Legacy B2B tools were designed for CXOs or procurement heads. But as developers became scarce and influential, they started adopting tools that empowered them. Platforms like Airtable, Slack, and Postman thrived because they catered directly to the people doing the work—not just decision-makers.
3️⃣ Missing Human Behaviour Insights: It’s not just about features; it’s about understanding how people think or act. Social platforms like Instagram and Facebook succeeded by tapping into dopamine-driven behaviours like instant gratification. Features like infinite scrolling and autoplay, once dismissed as trivial and lacking utility, became core to user engagement. Legacy companies often miss these insights, refusing to see them as value drivers.
So, how can companies avoid these pitfalls?
✔️ Pay attention to non-customers and what they want – even if you don’t build for them.
✔️ Build an advisory board with diverse perspectives—different generations, geographies, and genders.
✔️ Run experiments continuously, even for ideas dismissed as “fads.” You never know!
Have you seen companies fall behind because they missed a key trend or customer need? Please share them in the comments
