Markets change. After long periods of stability, one or more entrepreneurial disrupters enters the market and puts its stamp on an industry. Some of the old guard will fade away, some will adapt, and the new guard will take control. Eventually, after some time passes, the new guard becomes the old guard and the market is primed for another batch of disrupters. Rinse and repeat.
In consumer finance, we’ve watched this process over the years. Interestingly, many of the disruptions today look a lot like the disruptions of yesterday. And unlike consumer electronics or durable goods, consumer finance changes are generally only about delivery. For example, nobody is launching a device in consumer finance that changes the world, altering work and personal habits like the iPhone did. Instead, new websites and web-based apps are launched, electronic documents are embraced, or creative ways to get credit in the hands of consumers are offered. But we’re still doing the same thing: giving money to others today with the expectation that it will be paid back tomorrow.
Often in the past, market disrupters in consumer finance focused on the old guard’s conservative evaluations of risk. The new entrants designed shiny mousetraps and found that they snapped closed pretty effectively. After a few tests, they took the market by storm. But a couple years later, while the old mousetraps were still snapping closed in their dull, repetitive ways, the shiny new mousetraps were failing. The market had turned but the old guard survived. (Wait – is it supposed to happen that way?)
How does this work in contracting? We’ve watched specialist contractors take center stage only to be replaced by generalists and then back to specialists again. But that’s essentially delivery. Are the disruptions in the market coming from new home improvement products? For example, we saw the days when triple-pane windows were en vogue, followed by the products to facilitate “aging in place” and after that everyone started jumping into residential solar.
Today, the latest entrants into consumer finance are the technology companies. They have some shiny new mousetraps to offer. Who are the latest entrants in remodeling and replacement contracting? Who are your competitors? Where are the next market disruptions coming from?