In a previous post (Fix Your Bottleneck First), I wrote about the importance of fixing a bottleneck in your business. Unblocking a business constraint can have a positive impact on everything from profitability to workplace morale.

But what if you want more than an incremental increase? What if your business is stuck on a plateau and you want to launch up to a peak ten times higher in the sky? To grow exponentially, you have to unblock a different kind of bottleneck — one that is holding back not just your particular business but your entire industry.

Industry bottlenecks are constraints that are as much of a barrier for your competitors as they are for you. These strangleholds stem from “givens,” die-hard, industry-wide beliefs about customer behavior, costs, price points and other dynamics. Writing in the Harvard Business Review (July-August 2015), Barrett Ersek, Eileen Weisenbach Keller and John Mullins cite examples of companies that refused to accept industry roadblocks and found creative, profitable ways around them. Here are just two:

  • Dublin-based Ryanair avoided the high landing fees considered part of doing business in Europe by using remote WWII airfields, enabling them to attract masses of customers with rock-bottom prices.
  • India’s Airtel became the largest mobile operator in South Asia and the third-largest in the world partly through their decision to lease cell towers and equipment and outsource most business operations. Airtel’s creative innovation allowed them to deliver low-cost mobile service to customers in previously unserved, remote areas of India.

Barrett Ersek, whom I interviewed on my podcast, Commanding Business, calls an industry bottleneck the X Factor. Barrett says that finding the X Factor in your industry and creating an innovation to unblock it can result in up to a 10x competitive advantage in your marketplace.

Barrett should know! In the early 2000s, he leveraged his $2 million dollar lawn care company into one eventually worth $10 million. His creative innovation was using satellite imagery, then cutting-edge, to measure lawns remotely for cost estimates instead of following the industry standard procedure of sending sales people to measure in person. He saved so much on time and labor that he was able to slash customer acquisition cost from $275 per customer to $50. Barrett also greatly expanded his customer base because now he could measure lawns hundreds of miles away—instantly, and with no additional expense.

Not incidentally, Barrett Ersek’s creative innovation improved the customer experience by delivering estimates more quickly and efficiently, which meant speedier delivery of services. The breakthroughs of Ryanair and Airtel also benefited the customer. Uber made waiting in slow taxi lines merely an unhappy memory, and Apple iTunes let customers download only the songs they wanted without having to buy the whole album. McDonald’s brought fast food into the breakfast market with the Egg McMuffin, a sandwich commuters could munch with one hand while rushing to work.

Do you see a pattern here? The key to exponential innovation lies in improving the customer experience. Identify your X Factor by walking in your customer’s shoes, step-by-step. How can the experience be easier, cheaper, safer, more interesting, more worthwhile, more fun? Are there steps that can be streamlined or eliminated?

Breaking industry bottlenecks depends on disruption, which means breaking rules. But if you’re wondering which rules to break, the authors of the Harvard Business Review article recommend considering industry practices that fall into four categories:

  1. An outdated customer experience, whether at point of purchase or use.
  2. A nonessential or superfluous expense common in your industry.
  3. Significant financial risk or psychological barrier to purchase for customers.
  4. Detrimental side effects of the product or service.

Future posts in this series will give examples of leading companies that broke industry bottlenecks in all these categories, such as Blockbuster, Redbox, Outback Steak and Starbucks. We’ll discuss how to convert your X Factor into a metrics-driven goal. We’ll also address the growing importance of digital technologies in disrupting business as usual.

Want to learn more?

We can help you find your X Factor and develop the software innovations to turn it into exponential improvement.