Products and mass behavior shifts
Every crisis and/or Macro trend brings to light new opportunities that give exponential rise to a few outlier companies. The pandemic for example saw the rise of great companies across tele-health, payments, collaboration etc. to newer heights.
This happens because each mega event has the power and influence to accelerate behavior changes at scale.
Companies with the right products and with the right distribution act as catalysts for these mass behavior shifts. If correctly leveraged, these products end up creating new industries and emerge as category leaders, growing exponentially in the process.
Typically great products would catalyze these behavior shifts by two key levers:
- Low Switching Costs — They make it easy for mass new users to transition into a new behavior by lowering switching costs.
- Strong sustainability — They make it insanely difficult for these users to reset back into how they were behaving earlier.
Few examples below —
When demonetization stuck India, millions of us were left struggling to perform basic chores like paying for groceries. PayTM enabled cashless payments and accelerated a behavior shift in payments.
- Switching Costs were lowered both for merchants and consumers. PayTM’s aggressive acquisition signed up millions of merchants rapidly and Consumers got access to an easy cash alternative.
- Strong sustainability — Efficiency of a new payment method, network effects and engagement levers like cash-backs/wallets etc. enabled a sustained shift to cashless. We now have a thriving payments ecosystem with multiple P2P/B2B/C2B payment offerings supported by a sturdy infrastructure.
Another example — Covid’19 has been an unfortunate crisis that triggered hundreds of micro and macro behavioral changes for billions globally. Mass remote work for example was one big behavioral shift. Zoom catalyzed the shift to remote work by the same two levers:
- Really low switching costs: Quick install, Zero commitments, FREE for 40 minutes etc. were mechanics that enabled millions of first time users to start “Zooming” seamlessly. It was just easy to adapt and get going, since it did its core job really really well.
- Strong Sustainability : Product worked flawlessly even through it was seeing unprecedented scale. It supported cross platform, zero latency, minimal call drops etc. and users found it sticky in the workplace, slowly becoming a habit that is comfortable for most. This shift will also likely be supported by external macro trends such as more remote collaboration tool penetration (slack, teams, docusign etc.) , cultural or corporate policy shifts and personal habits.
Yet another example from last year is Peloton. People had an intrinsic motivation to stay fit but gyms were shut and Peloton swooped in rapidly.
- Switching costs were low — buying a Peloton was super easy. Indoor fitness was already popular and the switch to Peloton did not require ton of cognitive efforts. The Dollar switching cost potentially was a friction but was negated with a strategic “buy now pay later” partnership with Affirm and thus buying a peloton became as cheap as a monthly gym membership.
- Strong sustainability — Still early days, but good engagement mechanics, a thriving content ecosystem, great virality & network effects etc. have given Peloton boosts in retention. Early signs indicate users are likely to engage long term with Peloton. Also with more players entering the “networked fitness” — this space is likely to stay and grow, potentially sustaining over the long run.
Teams could spend years linearly scaling a product and then an unexpected trend or crises gives them an “explosive growth” moment.
However they need to be well placed to capture and leverage this opportunity. If they have already prepared and ironed the right acquisition/distribution with a healthy top of the funnel, these products will multiply the amount of people shifting to the new behavior. They will become category creators if they are able to sustain this new behavior over time and prevent behavior “resets” for this new mass audience.
Thus, when a product emerges 10X acting on a mass behavior shift, it’s not just a matter of luck. Remember that this product positioned itself well in advance and it allowed them to ride the waves of a supporting macro trend.