How to Increase Margins After a Disruption

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Once disrupted, can your product be repositioned for the luxury market?  (Image: Pixabay)

We recently talked about how the best companies combine talent and technology in the most efficient way to innovate in their field.

Most leaders inside the boiler room pave their way in pure technology plays. But some companies build their new competitive advantage upon the premise that most of us have moved so comfortably into the digital world that it has elevated analogue products to where they can now be monetized as luxury goods.

Replaced by digital music files, vinyl recordings now sell for larger margins to audiophiles.
Disrupted by digital files, vinyl recordings now sell for larger margins to audiophiles.  (Image: Pixabay)

Vinyl recordings, excluding their content value, were commodities as a sound medium. Now they are an expensive, high-margin acquisition for audiophiles.

Think of how traditional analogue watches were gradually replaced with digital timepieces in the 1970s. Once the transition was nearly complete, traditional timepieces regained lost market share by repositioning themselves even further into the luxury market.

A hand-written note is treasured when most messaging is digital.
A hand-written note becomes treasured when most messaging is digital.  (Image: Pixabay)

Fountain pens lost their dominant share of the market in the 1950s with the arrival of the ballpoint pen. Today, a fountain pen is a high-end luxury good with higher margins than their 1950s’ counterpart.

Inside the Boiler Room celebrates disruption. As disruption increases the efficiency and productivity of the market, disrupted industries can reposition themselves from high-revenue, low-cost commodities to high-end, high-margin luxury goods.

As communication is now almost exclusively digital, handwritten letters, especially those showcasing beautiful calligraphy, are even more valued by their recipients .

HR Avant-Garde spent time with Kunal Sheth to see what he had to say about our premise on how, with enough disruption, analogue can sometimes trump digital with higher margins than before.

Vincent Suppa works with startups and investors and teaches graduate courses at New York University. His email is suppa@suppa.org.

© Vincent Suppa 2016