Apple woke up. A couple of years ago, it started recognizing its future was not in elegantly powerful hand-held wands, nor even equally beautifully-rendered wearables.
Zillow woke up. Umpteen months ago, it began to get that its future was not as a data platform that made money on advertising.
Apple and Zillow--or really, rather, the smart people at their helms--came to understand that what's made them wildly successful up to now won't secure either of their places as going concerns, let alone iconic technology game-changers.
Apple's self-disruptive pathway takes the organization, its reputation, and its bid for a future into a brave new world, practically as a start-up, where other powers already play, and where its own foray is yet largely untested. Still, Tim Cook is on a mission to remake Apple--arguably, the No. 1 brand in the world--from essentially a premium status products company to a premium services organization with a regenerative focus on unparalleled customer experiences.
Zillow, on the other hand, has moved from being a business whose value based itself on helping people know what they needed to know to make residential real estate decisions, to one that now goes a few big strides further, to help them do what they do after they make those decisions. A business that built itself on the democratization of knowledge about real estate, removing an unfair asymmetry from consumers' search for homes, and giving them information-is-power advantages they never had before, now enters its own brave new world of buying, selling, and financing properties to further remove pain and friction from people's pursuit of the homes of their dreams.
Both self-disruptions are regarded as risky. Some even would say they're stupid.
The naysayers started in the moment Apple laid out plans for its preliminary platforms for services last week.
Among the skeptics:
Chief Executive Officer Tim Cook is a supply chain expert who spent years negotiating with eager component manufacturers in Asia to assemble the blockbuster iPhone. Now Apple must repeat this feat with Hollywood stars, newspaper publishers, banks and game developers. Many of these partners are more wary of working with tech giants, or have already teamed up with rivals like Netflix Inc., Amazon.com Inc. and Google.
"They’ve established themselves as masters on the component side, but it’s completely different in video entertainment," said Mike Bloxham, senior vice president of global media and entertainment at consultant Magid.
The doubters will also surface as Zillow remakes its own business model based on what pain it realizes it can reduce in would-be home buyers' journey. From HousingWire:
In 2017, Zillow shook up the real estate industry when it announced that it was getting into the home selling business by launching “Zillow Instant Offers.”
In the program, homeowners looking to sell their home in certain markets were able to get cash offers for their home from selected investors interested in buying it, all within Zillow’s platform.
But that was just the beginning. Later, Zillow began buying and selling homes directly to and from homeowners, becoming an iBuyer. Through its “Offers” program, Zillow buys a home directly from a seller, makes the “necessary repairs and updates” and lists the home “as quickly as possible.”
Zillow expanded the “Offers” program to new markets, but it didn’t stop there.
Last year, the online real estate landscape shifted dramatically when Zillow announced that it was getting into the mortgage business by buying Mortgage Lenders of America.
These are Silicon Valley tech companies, one may mistakenly conclude, and this type of disruptive innovation and transformation go with the turf in that business environment. Neither Apple's nor Zillow's strategic aim nor business model change, by any account however, is being driven by technology.
Supported by technology, yes. Empowered by data and technology, yes.
But not set in motion by technological change--neither in the development nor the adoption of it by users.
The disruption itself in both cases--and this should be a focus area for home builders, who with architects, investors, engineers, developers, and materials and products suppliers should be self-disrupting into their own brave new development and building model--comes from the one place disruptive innovation can originate.
The consumer--or user--value stream, and where there's pain in that process currently, and likely, will be for years to come.
Check out this piece from [email protected], featuring a q&a with Harvard professor and author Thales Teixeira on what technology means--and doesn't mean--to successful disruptive innovation. His focus is on a hyper-detailed look at where value gets created and where it gets negated.
I call it the customer value chain. Basically, it is looking at each of your customers or potential customers and mapping out all of the activities that they are need to do in order to acquire products and services.
For example, 20 million people in the U.S. need to take three or more pills per day. They need to go to the doctor, get a prescription, get the prescription filled, get their medication, take it home and sort it out because they might have to take a pill after lunch, another at night, and so on.
These are all activities required for patients to take their meds, and this is the customer value chain. The reason I call it the value chain is because when you look at any customer in any market buying any product, you can classify those activities that the customers have to go through in one of three types.
“Decoupling is looking at one activity in the customer value chain and deciding to do it much better than the incumbent.”
Is it a value creating activity? Taking your pills is actually a value creating activity. Is it a value charging activity, meaning do you have to pay for it? In this case, paying for the medication, paying for the doctor. Those are value charging activities. And last, is it a value eroding activity? For me as a patient, the physical activity of going to the doctor doesn’t create value for me. It’s a necessary evil, so to speak. The activities of having to order or buy or pick up medicine are also value eroding activities. When we look at the customer value chain, these are three types of very distinct activities.
Value creating Value charging Value eroding
The simple fact of the matter is that while a home--as we're often reminded--is the single biggest purchase many of us ever make in our lives, and is the source of untold "value creating," it's also the source of value charging, and value erosion all along the continuum of our use of it.
There's pain, aggravation, anxiety, and no end of a certain amount of grief related to the buying, the living in, and the selling of our homes.
Builders, developers, and investors in residential properties--as well as their manufacturer, materials suppliers, trades, and other partners--have interwoven themselves into the consumer value chain and built empires from their role in it.
Both Apple and Zillow realize three key challenges to their business future.
One is that the offerings they introduced to the market and with which they launched their juggernauts--platforms that stood out and gave customers a distinct new experience--won't necessarily carry their enterprises on a regenerative pathway forward. Two is the recognition that a tech and data arms race--nor even consumers' exponential embrace of technology--will not in itself drive the disruption each needs to trigger to get on that regenerative pathway. And, three, there's plenty of value creation, value charging, and value erosion in the consumer experience realm to allow for impact, scale, and sustainability in their respective domains.
Pain is everywhere and constant when it comes to home buying, homeownership, and selling one's home. That's where home builders can self-disrupt, address some of that pain, and give themselves another patch of dynamic growth in the decade ahead.