The barbell effect is a process where changes in demographics, or technology, or even new behaviors disrupts established industries. Those who are able to adapt become the bell ends and those who are unable to become the bar. A good example for this is the housing market; where rental units tend to be more popular at the low and high end, thus forming the bell ends and leaving the mid range as the bar.
- At the macro level, the barbell doesn’t exist prior to the disruptive pressure – it’s the result, not the cause.
- In the marketplace, the energy causing the disruption is customers empowered with new expectations.
- The disruptive pressure squeezes industry players who fail to adapt causing them to contract into the bar.
“When customers are empowered, businesses are disrupted and barbells are likely.”