Start-ups are increasingly successful at unbundling incumbents, thanks to three primary factors. Firstly, the rise of mobile computing allows start-ups to engage customers with low-cost, targeted apps that outperform the offerings of larger companies. Secondly, the advent of cloud computing has drastically reduced the cost of starting and scaling a business, making it easier for start-ups to compete. Lastly, the growth of online communities and social networks has made it easier for start-ups to reach potential customers and gain traction.
Unbundling is a disruptive process where start-ups target a single function provided by a larger company, offering a superior, more focused service. This strategy is proving highly effective, with many start-ups outperforming incumbents in their chosen niche. However, this does not necessarily mean the end for incumbents. Larger companies can survive and thrive by focusing on their core competencies and leveraging their existing customer base.
In the future, incumbents must be prepared to partner with or acquire successful start-ups to stay competitive. Meanwhile, start-ups should continue to focus on providing superior, targeted services to disrupt the market. The rise of mobile and cloud computing, coupled with the growth of online communities, will continue to drive this trend.
Go to source article: https://hbr.org/2015/06/why-startups-are-more-successful-than-ever-at-unbundling-incumbents