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<a href="http://www.claytonchristensen.com/books/the-innovators-dilemma/">The Innovators Dilemma</a> written by Clayton Christensen describe a business phenomenon that has always been around but never captured or well-studied before Christensen. In the book, Christensen argues that many companies that have suffered a dramatic decline have fallen not due to bad decisions or mismanagement, but because they have simply continued to make money and keep customers happy (<strong><u>or in the case of traditional mattress retailers keep shoppers un-happy</u></strong>). Hence the dilemma in the title: doing the right thing or the same thing as has been, could be the exactly the wrong thing to do.

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Disruptive companies are not necessarily the developers of amazing new technologies like Apple, as they can also be innovators that make products and services more accessible and affordable, thus putting them in reach of a much larger customer base. Christensen describes it as “<em>… a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves upmarket, eventually displacing established competitors</em>”

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<ol>
 	<li><strong> Disruptive innovation must start with a smaller company</strong></li>
</ol>
Notice we said “smaller” company, not small. The original definition of the disruption theory describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.

Here’s how it works: larger, more established companies begin to focus on improving their products and services for their most demanding customers. This leads them to overlook customers who may not be able to afford their high-quality services. In this situation, a smaller, disruptive innovator swoops in and offers a product to those overlooked corporations, which brings us to our next point.

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<ol start="2">
 	<li><strong> What Disruptive Companies are <u>NOT</u>, PREDICTABLE:</strong></li>
</ol>
Many of these disruptors have commonalities in their business models and transformations. But instead of looking just at what great innovators do, you need to examine what they don’t do. And one trait that is missing from nearly all recent disruptive innovators is predictability. To innovate, you need to let go of traditional organizational practices and the kind of control it engenders. Planning becomes a fluid process and the organization must be structured in a loose enough way that innovation can be captured and allowed to grow uninhibited without being constricted by the established barriers. Incremental innovation and improvement in products or programs is enabled by truly agile businesses where the product or program doesn’t have to be perfect when launched. A solution is identified, implemented and developed within the company through collaborative testing, launched, and then refined through feedback on the user experience. By definition, an innovative disruptor doesn’t create a breakthrough, but starts small and moves up by refining the product and capturing a greater share of the market as it does—a trait that is exploited by an agile, highly socialized, platform-oriented business with fluid communication

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<ol start="3">
 	<li><strong> Disruptive innovation may originate in a low-end foothold</strong></li>
</ol>
According to a recent Harvard Business Review article, there are two types of markets that incumbent players tend to overlook; the first is the low-end foothold. These exist because companies are so focused on providing the most high-end products to their top-paying clients that they tend to neglect those clients who don’t require as much. This opens the door for disruptive innovators to offer “good enough” products to those clients.

The established companies often disregard the disruptive innovators at first because they are so focused on their higher paying clients. This gives the disruptive innovators time to grow and expand and eventually capture a greater client base. By the time the established company discovers what is happening, it is too late to counter. Thus, the disruption theory takes place.

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<ol start="4">
 	<li><strong> Disruptive innovation may originate in a new-market foothold</strong></li>
</ol>
The other group often overlooked by incumbents is the new-market foothold; this foothold exists when disrupters create a market where there was not one before. According the Harvard Business Review, they turn non-consumers into consumers. New markets typically do not attract well-established businesses because of the strategic work required to get their attention. Disruptive innovators are willing to put in the time and effort to creatively reach out to these new markets and capture the fresh audience.

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<ol start="5">
 	<li><strong> Disruptive Companies understand communication both internally within its leaders and externally to customers</strong></li>
</ol>
Open and connected communication within an organization: The sharing culture is also a common theme among innovators, with greater success being realized in corporations. This is a practicality that revolves around the age-old adage that two heads are better than one, and that hard work is rewarded. Giving people access to the ideas of others and letting them develop those ideas as a team—then rewarding proportionally—promotes collaborative problem-solving. Direct Customer Communication: A major asset developed and utilized by disruptive innovators is a direct channel of communication with the user (often the creator of value also), which facilitates the rapid identification of problems, development of ideas, and feedback on development or can create an enhanced selling scenario wherein value is conveyed.

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RSS is uniquely positioned in an industry that has had very little change in the last 75 years. The mega chains like Rooms 2 Go, IKEA and Mattress Firm have grown while the mom &amp; pops have fallen to the wayside. Tempurpedic which started in 1992 was nothing 25 years ago and became a disruptor in the mattress industry that is now the largest company after buying Sealy. Bed in A Box companies are disrupting the traditional retail system now because retail giants have too many choices, make the buying decision confusing and customers dislike the experience, likening it to car sales.

RSS is already an agile company with open communication and we share and build ideas while also improving existing programs and creating new ones. We are disruptive in that we can nimbly represent both the value customers like from mom &amp; pop locally owned businesses via a mattress or a “Local Furniture Direct” location while at the same time capturing the advantages of the chain recognition/feel that BoxDrop gives us. We are an ever-fluid business that not only has flexible leadership when it comes to attacking program, product and customer needs ie: Private Labels, Websites, Nature Sleep program (soon to be our own completely in house), methodologies applied to multiple categories for different sized and/or skilled entrepreneurs.

We look at traditional retail and say “how can we be different in such a way as to build value. Then what products and or programs work best for our various types of business?” At the same time by seeing the opportunity to DISRUPT the traditional distribution selling system that all of the mega chains use. We are “reverse” building a national distribution system by creating hundreds of small foot prints then “back-opening” our own Super BoxDrop’s designed to attack traditional retail in 20 to 30 large markets.

With an open-3-days and by appointment hybrid we empower and better serve all of our individual locations because they will be providing distribution opportunities on close-outs and private label purchases that have to be made in such quantity (container &amp; truckload), that a 2000 to 7000sq ft location cannot handle them alone due to space, capital or both.

RSS then services those small locations in small purchases which they can handle. We are cutting-edge on how we communicate directly to the customer via social media and constantly building ways to retain that customer so they come back. We are always an army/community on the attack. Our enemy is BIG-RETAIL and its OVER-PRICED corporate/cold atmosphere/experience.

We are designed to be disruptive, as a whole, to a $100 BILLION dollar Home Furnishings industry with our model and potential in wholesale/retail sales. By being so nimble and so informed to the pulses of the customers and the industry simultaneously, we can also create disruptive products (like our own bed in a box) and programs like our own e-commerce systems to enhance brick &amp; mortar locations that are added to our existing successful programs. We will build our own brands: Royal Heritage, Sleep2Win, BoxDrop, Diamond Sleep and others.

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It all starts with the fact that we completely understand the need in the marketplace for the “RUGGED ENTREPRENEURS” to have a way to satisfy their desire to be their own boss. One of the definitions of RUGGED is: rough and strong in character as to having a sense of tested ability, stamina or resolution. That is who we are as Leadership Team Members and that is who our successful dealers (customers) are. Knowing that about ourselves and our customers is invaluable because it is something to be proud of but also something not generally recognized by other business ownership programs. We have our own unique system for filtering/identifying RUGGED ENTREPRENEURS.

The new Dealer/RUGGED-ENTREPRENEURS are then trained by our Division Managers who represent the BEST of the type of RUGGED ENTREPRENEURS that make our businesses work at the highest levels. At the same time, we provide through our openness a RUGGED ENTREPRENEURS COMMUNITY like no other that is competitive yet friendly, provides a platform for edification and reward, promotes open communication and training, promotes personal relationships and as a whole creates a very valuable stickiness that increases retention and longevity.

We offer a pathway for the most ambitious of our customers to have multiple locations and even multiple types of locations thus helping us more quickly expand our footprints and then our reversed distribution programs. This thinking tied to BoxDrop branding gives us a model in which the best RUGGED ENTREPRENEURS can build a saleable asset and we can help them sell it (already have done it). They can also make it multi-generational and we have that happening also.

This presentation comes nowhere close to describing all we can do or all we are capable of but rest assured it shows you enough to know that we can and will be able to hit 250 location over the next one to two years and we will be able to grow that to 1,000 locations supported by 20 to 30 wholesale/retail specialty locations and beyond. Why are we so certain of this?

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