Industry Insider or Outsider Best Suited to Disrupt?
I’ve started to think more about this in recent weeks. At AWH, I am a partner in digital innovation, and through my startup investing and advising, I see disruption by both types of people. Both have pros and cons, but ultimately, one is better positioned to succeed.
Pros and cons of being an insider or outsider disruptor:
- Insider Pros
- Intimate knowledge of heritage and current state
- Industry contacts and relationships
- Problem understanding and centricity
- Value of problem pain
- Likely willingness and tolerance to change to solve the problem
- Insider Cons
- Ego attached to reputation and stature in the industry
- Unwillingness to be seen as a disruptor by colleagues
- Making assumptions about problem and industry perspectives based on own experience
- Over-estimating the significance of the problem
- Building a product in the founder’s image of the solution to the problem
- Outsider Pros
- A fresh take on everything. Nothing is sacred
- Applying thinking from other industries
- Sees opportunities more than problems
- Imagines new ways of doing things and new business models
- Unencumbered by any legacy relationships
- Outsider Cons
- Doesn’t know industry terminology, policies, procedures
- No professional respect, given the naive position
- More likely to get repelled by industry and customers
- Perceived as a threat to incumbents
- Lack of network and relationships
Insiders and outsiders have succeeded in disrupting industries and creating innovation that otherwise might not have happened, or at least not when it did. Still, insiders are more likely to succeed. The importance of understanding the problem at a deep level and the impact/value of the problem is immense when creating a product that intends to disrupt how something has historically been done in an industry. The relationships and networks of being in an industry also have significant importance.
Here’s the rub, however. Insiders will soon become outsiders. Old ways of doing things and the policies, procedures, and workflows around them stay because someone, even someone with industry experience and knowledge, is attempting to change them. Given this, starting as an insider and leveraging all the pros of being an industry insider is best. Still, for insiders to understand, they will likely be received as an outsider once they try to disrupt the status quo.
Is being an industry insider who pursues disrupting something in the industry an intrapreneur? It can be, but in my experience, most intrapreneurs improve how their company does things, but not broadly for a whole industry. Some initiatives and products by intrapreneurs certainly impact the industry at large, but most intrapreneurs start with something other than that intent. An industry insider who, from the outset, is intentionally disrupting the industry is an entrepreneur with insider experience and knowledge. Intrapreneurs seek improvement inside their company. Insiders who become entrepreneurs seek improvement in the industry. Intrapreneurs, therefore, seek incremental improvement by working within the current operating norms of a company, while insiders who disrupt an industry are forcing broad change.
