How to Resolve Industry Friction to Create a Disruptive Value Proposition?

For every challenger brand founder, the landscape looks daunting. Incumbents have the capital, the market share, and the brand recognition. The conventional wisdom is to find a niche, optimize a process, or offer a slightly better feature. You’re told to reduce “customer friction” by streamlining onboarding or improving support. This is the path to incremental improvement, not market disruption. It’s about playing the incumbent’s game, just a little bit better.

This advice is fundamentally flawed. It asks you to apply bandages to a system that is systemically broken. You might fix a frustrating sign-up form or digitize a paper workflow, but you are still operating within the confines of a rigid, outdated model. You are merely sanding the edges of a cage. The real opportunity doesn’t lie in fixing the friction; it lies in understanding its root cause and building an entirely new paradigm where that friction is not just absent, but impossible.

But what if the friction itself—the bureaucratic bloat, the regulatory nightmares, the infuriating customer journeys—was not a problem to be solved, but a vulnerability to be exploited? This is the pivot from optimizer to disruptor. It’s the recognition that your competitor’s biggest liability is their legacy. Their processes are not just inefficient; they are a strategic anchor weighing them down. Your mission is not to help them sail faster, but to build a hydrofoil that makes their ship obsolete.

This article will deconstruct how to move beyond simple friction reduction. We will explore how to analyze and weaponize the systemic inefficiencies that incumbents are too slow or too invested to abandon. We will cover how to turn regulatory burdens into fortresses, why killing a process is often more valuable than fixing it, and how to find the “Blue Ocean” gaps that are invisible to those trapped in the old way of thinking. This is your playbook for turning industry-wide frustration into your most powerful disruptive weapon.

To navigate this strategic shift, this guide breaks down the core components of weaponizing friction. Each section provides a clear lens through which to view your industry’s weaknesses and transform them into your strengths, leading you from analysis to execution.

Why Your Customers Hate the Sign-Up Process: Friction Analysis?

The sign-up process is the first handshake between you and your customer, yet for most industries, it feels more like an interrogation. Long forms, unnecessary questions, and clunky interfaces are not just minor annoyances; they are symptoms of a deep, systemic disregard for the user’s time and intent. This is the most visible and visceral form of industry friction. It’s where your disruptive journey begins. Incumbents, burdened by legacy systems and internal data-hoarding policies, see this as a necessary evil. You must see it as their Achilles’ heel.

The data on this is damning. When a user is forced to navigate a convoluted registration, they don’t just get frustrated; they leave. In fact, dedicated research shows that 56% of consumers have abandoned an online service specifically because of a frustrating login or registration process. This isn’t a small leak; it’s a gaping hole in the hull of your competitor’s growth model. Every percentage point represents a customer who was interested enough to show up but was actively pushed away by bad design. This is a self-inflicted wound you can exploit.

Consider the classic case study of Expedia, which famously increased its annual profit by $12 million simply by removing one single, optional form field: “Company Name.” This wasn’t a multi-million dollar tech overhaul; it was the removal of a single point of friction. It proves that the cost of asking for unnecessary information is monumental. While your competitors are busy A/B testing button colors, you should be auditing every single step of their user journey with a simple question: “Is this absolutely essential for delivering value *right now*?” If the answer is no, it’s a target for elimination.

Your value proposition isn’t just a better product; it’s a radically simpler experience. Instead of asking for twenty data points upfront, ask for one: an email. Use social sign-on (SSO). Let the user experience the “Aha!” moment of your product within seconds, not minutes. You can always gather more information later, once you’ve earned their trust by delivering immediate value. By treating the user’s time as your most precious resource, you’re not just optimizing a process; you’re making a powerful statement that directly contrasts with the incumbent’s indifference.

How to Replace Paper-Based Workflows Without Alienating Older Staff?

Friction isn’t just external; it’s often deeply embedded within an organization’s internal workflows. Paper-based processes, manual data entry, and siloed information systems are the cholesterol of a legacy business, silently clogging arteries and slowing everything to a crawl. For a challenger, this internal friction at an incumbent company represents a massive opportunity. While they are busy shuffling paper and dealing with human error, you can be operating with the speed and precision of a fully digitized, automated system. This isn’t just about efficiency; it’s about creating a fundamental competitive advantage in operational velocity.

The transition away from these analog systems is often fraught with a different kind of friction: human resistance. Veteran employees, who have spent decades mastering the old way of doing things, can feel threatened or overwhelmed by new technology. Incumbents often use this as an excuse for inaction, fearing disruption to their established workforce. This is a critical error. The goal isn’t to force a blunt digital tool onto an analog workflow but to co-create a new process that respects experience while embracing efficiency. It’s about building a bridge, not a wall.

As the image above illustrates, the most successful transformations are collaborative. They involve pairing the institutional knowledge of experienced staff with the intuitive design of modern tools. Instead of replacing people, you augment their capabilities. A tablet can be used to digitize a form at the point of creation, eliminating manual re-entry. An automated system can handle the tedious task of routing documents for approval, freeing up a senior employee to focus on high-value judgment calls. By focusing on how technology can eliminate the worst parts of their job, you turn skeptics into advocates.

The cost of doing nothing is far greater than the challenge of change. Legacy systems don’t just slow things down; they actively create new problems. This digital friction, from crashing applications to slow networks, is a significant drain on productivity. This internal drag is your opportunity. By building your operations from the ground up with clean, integrated digital workflows, you create a business that is inherently faster, more accurate, and more scalable than any incumbent trapped in its paper-based past. Your lack of legacy becomes your greatest operational asset.

Optimization vs Disruption: When to Fix the Process and When to Kill It?

The most dangerous mindset for a challenger is that of an optimizer. Optimization is what incumbents do. They take a broken, convoluted process and try to make it 10% more efficient. They form committees, hire consultants, and launch multi-year projects to streamline a system that should not exist in the first place. As a disruptor, your role is not to be a better manager of a bad process. Your role is to be its executioner. You must learn to distinguish between problems that need fixing and entire frameworks that need to be obliterated.

Optimization is about sanding the rough edges. Disruption is about changing the material. Fixing a process accepts its underlying logic as valid. For example, optimizing a mortgage application means digitizing the 50-page paper form. Disrupting it means using alternative data sources and AI to approve a loan in minutes with only a handful of inputs. The first makes a terrible experience slightly less terrible. The second creates an entirely new one that makes the old way unthinkable. The optimizer asks, “How can we do this faster?” The disruptor asks, “Why are we doing this at all?“

This distinction is at the heart of genuine transformation. It inherently creates conflict, as it challenges the very foundations on which the incumbent business is built. As McKinsey Senior Partner Stephen Hall states, this is not a side effect to be avoided, but a sign that you’re on the right track.

A true transformation is disruptive. And it’s going to create challenge and tension and friction in the organization. We view those characteristics as being necessary co-travelers to delivering a true transformation.

– Stephen Hall, McKinsey Senior Partner

So, how do you decide? The litmus test is value delivery. If a process directly contributes to the core value proposition in a way that cannot be easily replicated or replaced, it might be a candidate for optimization. But if the process exists purely because of historical precedent, internal bureaucracy, or technological limitations of a bygone era, it must be killed. Every legacy process you adopt is a piece of the incumbent’s disease you inject into your own company. Your goal is to start with a clean slate, designing every workflow from first principles around the question: “What is the absolute fastest, simplest way to deliver overwhelming value to the customer?”

The Compliance Bottleneck: turning Regulatory Hurdles Into Competitive Moats

In most industries, compliance is viewed as pure friction—a costly, time-consuming bottleneck enforced by regulators. Incumbents complain about it, build entire departments to manage it, and see it as a tax on innovation. For a challenger, this is a profound misunderstanding of the strategic landscape. A complex regulatory environment isn’t a barrier; it’s a filter. It’s a pre-built wall designed to keep out the unfocused and the under-resourced. Your job isn’t to begrudgingly climb the wall; it’s to turn that wall into the foundation of your fortress.

This is the art of weaponizing compliance. Instead of treating regulatory requirements as a checklist to be completed, you integrate them into the core of your product and operations from day one. While incumbents struggle to retrofit their aging, patchwork systems to meet new rules (like GDPR or industry-specific data laws), you build a system that is natively compliant. Your architecture is designed around the regulations, making adherence automatic and effortless. This transforms a major cost center for your competitors into a zero-cost feature of your platform. You’re not just compliant; you are compliance-by-design.

The key is automation. Legacy companies handle compliance with armies of people. You do it with elegant code. By leveraging technologies like Robotic Process Automation (RPA) and AI, you can automate document verification, transaction monitoring, and regulatory reporting. This not only dramatically reduces your own costs and error rates but also creates a system that is infinitely more scalable than the incumbent’s manual approach. As your business grows, your compliance “department” doesn’t. This efficiency is a powerful competitive advantage.

Furthermore, this strategy positions you for the future. As regulations become more complex, especially with the rise of AI and data privacy concerns, your natively compliant system becomes an even stronger asset. While competitors are drowning in new paperwork, you are already prepared. In fact, emerging technologies will further widen this gap. For instance, experts predict that by 2028, generative AI will lead to a 30% drop in the risk of noncompliance in software contracts. By being an early adopter of such tools, you turn a universal industry pain point into a formidable competitive moat that slower, less agile players simply cannot cross.

Direct-to-Consumer (DTC) Shift: Removing the Middleman to Boost Margins

One of the most significant sources of friction in traditional industries is the value chain itself. Layers of distributors, wholesalers, and retailers sit between the business and the end customer. Each layer adds cost, complexity, and a delay in communication. They are a relic of a pre-internet world. For a challenger brand, this convoluted chain is not a structure to navigate, but a Gordian Knot to be cut. The Direct-to-Consumer (DTC) model is not just a sales channel; it’s a strategy for collapsing the value chain and eliminating entire categories of friction in one move.

By going direct, you gain three critical advantages that are impossible for incumbents tied to legacy distribution networks. First, you recapture the margin that was previously sacrificed to middlemen. This margin can be reinvested into a superior product, a better customer experience, or more aggressive marketing—creating a virtuous cycle of growth. Second, you gain direct, unfiltered access to your customers. You own the first-party data. You hear their feedback instantly. This creates a tight feedback loop that allows you to iterate and adapt far faster than any competitor relying on third-party sales reports.

Third, and most importantly, you control the entire customer experience. As the minimalist pathways in the image suggest, you can design a seamless, elegant journey from discovery to purchase to support. There are no handoffs, no conflicting messages from retailers, and no one to blame when things go wrong. This total ownership of the experience is the ultimate way to eliminate friction. The opportunity this represents is enormous; the move towards direct digital solutions is a core driver of the market’s growth, reflecting a fundamental shift in how value is created and delivered.

However, simply launching a website is not a DTC strategy. The key is to use the recaptured margin and data to create a demonstrably better experience. This means investing in journey analysis to understand user behavior, personalizing the shopping experience, and building a community around your brand. You are replacing the (often poor) service of a retail middleman with a superior digital one. Your website isn’t just a store; it’s your flagship product, your best salesperson, and your primary research lab, all in one. This is an advantage that channel-bound incumbents can only dream of.

How to Find the “Blue Ocean” Gap Your Competitors Are Missing?

Competitors in established markets tend to fight over the same things: price, features, and market share. This is a “Red Ocean,” red with the blood of endless competition. A “Blue Ocean,” by contrast, is an uncontested market space where competition is irrelevant. These spaces are not found by out-competing rivals; they are created by fundamentally redefining the problem. And the most fertile ground for creating Blue Oceans is by identifying and eliminating a form of friction that the entire industry takes for granted.

Think about the media industry before YouTube and TikTok. Creating and distributing video content required expensive equipment, production studios, and deals with broadcast networks. The friction was immense, limiting creation to a small group of professionals. YouTube and TikTok didn’t build better TV studios. They eliminated the friction. They created platforms that allowed anyone with a smartphone to become a global broadcaster. By connecting creators and audiences directly, they didn’t just compete with traditional media; they created an entirely new market for short-form, user-generated content—a classic Blue Ocean.

To find your Blue Ocean, you must stop looking at what your competitors are doing and start looking at what they are *not* doing. What are the compromises and frustrations that customers have been forced to accept as “just the way things are”? What are the “non-customers”—the vast group of people who are completely shut out of the market because the existing solutions are too expensive, too complicated, or too inaccessible? Your disruptive opportunity lies in serving them.

This requires a shift in philosophy. As Stanford Professor Robert Sutton, author of *The Friction Project*, suggests, the goal is not to make everything easy. Some things should be hard. The strategic goal is to “clear the way for the things in life that are hard and should be hard.” For a business, this means making the delivery of your core value proposition brutally, elegantly simple, even if it means making other, less important things (like breaking from industry norms) harder. You are looking for the one piece of “stupid friction” that, once removed, unlocks a wave of new value for a previously ignored audience. That is the gap your competitors can’t see.

Why Rigid Business Models Fail in 90% of Tech Disruptions?

Incumbents are not defeated because their products are bad or their people are incompetent. They are defeated because their business models are rigid. These models, perfected over decades for a stable world, become a straightjacket in the face of technological disruption. They are optimized for predictability and efficiency within a known paradigm, making them catastrophically unsuited for change. When a disruptive challenger appears, the incumbent’s greatest strength—its established system—becomes its fatal weakness.

The statistics on this are stark and unforgiving. Despite pouring billions into “digital transformation” initiatives, the failure rate is astronomical. Comprehensive research indicates that between 70% to 95% of these projects fail to meet their objectives. Why? Because they are attempts to bolt new technology onto an old model. It’s like putting a jet engine on a horse-drawn carriage. The underlying structure cannot handle the speed and a spectacular crash is inevitable. The problem isn’t the technology; it’s the refusal to abandon the business model that the technology is meant to replace.

An agile disruptor operates on entirely different principles than a rigid incumbent. The differences in their core metrics, as highlighted by industry analysis, reveal two completely different species of business.

This table, based on data exploring tech trends, shows that agile disruptors, particularly in AI, scale revenue faster, operate in environments where knowledge becomes obsolete in months, and focus on genuine business transformation. In contrast, rigid models are stuck in perpetual pilot phases and see technology as a service to be delivered rather than a catalyst for fundamental change. This is the playing field. You are built for speed and adaptation; they are built for stability and control. In an era of rapid disruption, only one of those models can survive.

How to Drive Corporate Innovation Without disrupting Core Revenue Streams?

This is the central paradox for any established company: how to innovate for the future without jeopardizing the revenues of today. This question paralyzes incumbents and creates the very opening that challenger brands exploit. While they are busy trying to protect their core business, you are free to build the thing that will make their core business obsolete. Understanding their dilemma is crucial, as it allows you to predict their moves and identify their blind spots.

The vast majority of large companies are aware of the threat. In fact, research shows that 89% of all companies have already adopted or plan to adopt a digital-first business strategy. The intention is there, but the execution falters. The reason is that true innovation is inherently disruptive to existing structures. It threatens established P&Ls, challenges political hierarchies, and cannibalizes existing products. To manage this, incumbents create “innovation labs,” “internal ventures,” or “digital twin sandboxes.” These are attempts to quarantine innovation, to study it in a controlled environment where it can’t harm the mothership.

This approach is fundamentally defensive. It is designed to contain change, not unleash it. While the incumbent is carefully running pilots in a lab, you are in the market, acquiring customers and learning in real-time. Their cautious, risk-averse strategy gives you the one thing you need most: time. Time to build a better product, time to find product-market fit, and time to build momentum. By the time their “pilot project” gets approved for a full rollout, you’ve already captured the market.

Your goal is to be what they cannot be: a single-minded entity focused on a new way of delivering value. You have no legacy revenue to protect, no political turf to defend, and no outdated processes to maintain. This “burden of incumbency” is their problem, not yours. Your strategy should be to make their attempts at controlled innovation look slow, clumsy, and irrelevant. While they are trying to innovate without disruption, your entire purpose is to be the disruption.

By systematically identifying and weaponizing these points of friction, you transform your status as a challenger from a disadvantage into your most potent strategic weapon. The path forward is clear: find their pain, make it your purpose, and build the future they are too afraid to embrace.