Professor Teixeira of Harvard Business School finds that customers visiting marts in the U.S. and Brazil pursue different values. Customers in the U.S. preferred certain marts with ultra-special items that vary every day. However, customers in Brazil showed the characteristic of purchasing the lowest price of the items they would actually buy even if they went to several marts rather than those with many ultra-special discount items. This is why Walmart ranks first in market share in the U.S., but remains third in market share in Brazil (even if the number of stores is similar). Decoupling can be successful only when it wins the hearts of customers through close research and research on the characteristics of customers in the market we target, such as region, culture, and ethnicity. This episode contains countermeasures from existing companies facing decoupling startups and strategic applications from companies that want to implement decoupling strategies.

[Series preview]
① Decoupling, the core principle of destructive enterprises 
② Countermeasures and Utilization of Destructive Enterprises (→ we are here now!)

Two solutions to decoupling

Start-ups break up part of the existing customer value chain (CVC)(1), and take one or more steps. Start-ups that succeed in decoupling will quickly emerge as a threat to the market, and existing companies will be hit hard. For example, Airbnb, which provides accommodation-sharing services, broke the customer value chain of hotel stays and became a new option for customers who felt uncomfortable using it. Not all hotels in the world have collapsed, but Airbnb accounts for about 26 percent of the global accommodation market(2). As of 2019, Airbnb was valued at $31 billion, higher than Hilton Hotels, a global hotel chain. If the chain separated by decoupling attacks is in the making most of the money, existing companies could collapse. No one can stop the emergence of disruptive companies. How can existing companies respond to this problem?

1) chain recombination
We can reclaim customers by re-combining broken customer value chains. We use attractive items and scarce services to prevent customers from leaving after choosing our company. Customers entering the value chain stage won't be able to leave easily if product compatibility is limited or membership withdrawal policies are used to make us pay a lot to leave.

2) Rebalancing after separation
There is also a way to acknowledge the disconnection, separate the steps as the customer wants, and then rebalance. Let's give an example! Best Buy, an American electronics store, suffered the most from Amazon's price comparison app. It had a hard time as customers came to the store, experienced the products, and then bought them at Amazon. Because they couldn't lower the price like Amazon, Best Buy solved this problem in a completely different way than by forcing customers to buy them. It set up a policy to charge electronics manufacturers (such as Samsung and Apple) for product exhibitions and displays. By introducing an entry fee system, we rebalanced the profit structure by creating a structure where customers can earn profits regardless of whether they buy or not.

Use of Decoupling Principles

There's a saying that the best defense is attack. The decoupling principle not only enables existing companies to advance their business models, but also to develop a more sophisticated and effective market share and marketing strategy.

① Understand customer inconvenience
The CEO of the fashion brand A, which exceeded 30 billion won in annual sales last year, said in an interview that he starts his work by reading customer reviews and comments on inquiry boards every day. He said that he is looking for improvements in the voices of customers and finding new product ideas. As such, the most important thing is to accept and take into account what kind of inconvenience customers are feeling and what kind of desires they have toward our brand.

② meeting extreme needs
When upgrading a product or launching a new service, we need to delve deeply into what our customers think is important. This is because we can move customers' minds. Company B, which provides SaaS specializing in inventory management, launched an app specializing in inventory management regardless of industry or field, gaining 200,000 users from over 90 countries around the world. In some ways, we need to be strong and detailed enough to meet the needs of our customers that no product can match. That's why our customers will purchase our products.

③ Acquire a large number of customers
It's also important to consider whether you'll have the opportunity to attract a large number of customers at once. For example, Airbnb has pursued a strategy to attract a large number of customers from the beginning of its business by targeting large conferences that are in high demand for hotel stays. Uber has also succeeded in targeting customers who flock to after sports games or concerts.

④ The key to growth is always
The key to growth is always 'what synergies we can provide to our customers'. To be specific, we need to be able to save you money (time, effort, resources, etc.). Because the benefits you will enjoy must be clear, but it can produce customer behavior. Make sure that the advantages of our products are directed at our customers rather than any marketing strategy or promotion plan.

⑤ When I need to grow one more time
If our brand has grown thanks to the enthusiastic support of our customers, we need to be ready to move on to the next stage of growth. To do this, it is necessary to reorganize it into a customer-oriented company. When a company turns its attention to something other than its customers' needs, growth slows. Always keep in mind that 'customers' are the most valuable assets for companies.
Some businesses forget that they have grown thanks to their customers and are obsessed with the "resources" that they have come to own at some point. Every decision-making is focused on expanding the resources of the business. Forgotten businesses will cease to grow immediately. If you want to take another leap forward, you should cherish your customers and focus all your decisions on "increasing the number of customers" and "improving the ability to benefit you."


(1) Customer Value Chain, the entire process from which a product or service is delivered to the customer
(2) Apptopia, 2022

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