Gull arrived in New Zealand with a simple pitch: no shop, no loyalty programme, no forecourt service. Just cheaper fuel at an unstaffed pump. The Commerce Commission has found that having one of these sites within a five minute drive pulls local 91 prices down by an average of 6.1 cents per litre. Gull now moves around eight per cent of the country's liquid fuel volume.
In March 2025, Z Energy, the market leader, launched U-GO, its own low cost unstaffed brand. By February 2026, U-GO had 29 sites across both islands, priced five to fifteen cents a litre below the standard Z offer.
That is a textbook low cost disruption. A low cost challenger enters at the value end of a market dominated by incumbents, reshapes what consumers expect to pay with a basic value proposition that is “good enough”, and eventually forces the dominant player to consider launching its own version of the challenger's operating model. The same pattern is now playing out across the economy at AI speed.
Routine legal research, basic financial advice, first line customer support, administrative healthcare work. Wherever a customer was paying to offload complexity they found tedious, and the service provider's value proposition was "we will navigate this for you," that value proposition is now under pressure.
Low cost disruption, at a new speed
None of this is theoretically new. Christensen's low cost disruptor model describes the pattern with precision. A new entrant arrives at the bottom of the market with a technology cost advantage, undercuts the incumbent on price, and expands upwards as the technology matures.
What is new is the speed at which AI is compressing that cycle. The cost curve on capable AI is compounding weekly, not annually, which means the technology advantage a disruptor enters with keeps widening rather than plateauing. Pricing that would once have looked unsustainable, free at the margin against per seat incumbents, is now a standard entry move. Incumbents that might have had five years to respond in previous cycles have eighteen months, perhaps less.
Being disrupted is not a choice you get to make. The choice you do get to make is how hard you are to disrupt and how quickly you can create incremental, defendable value.
The moat question
The question to sit with is not "will my business be disrupted." It is "what will make my business resilient to disruption?"
A strategic moat sits at the intersection of two things.
- The first is what genuinely drives customer choice. Not what you think drives it, not what your brand promises, but what actually causes a customer to choose you over the other competing alternatives.
- The second is what is difficult for a disruptor to reproduce. Technology capability is rarely on this list for long. Earned customer relationships, trust built over years, specialist data and knowledge, operational depth, regulatory alignment, network effects among your customers. These take time to build and time to copy.
A capability that drives customer choice but is easy to reproduce is not a moat, it is a feature. A competitor with enough motivation can copy it inside a release cycle, and once they do, your customers have no structural reason to stay. A capability that is hard to reproduce but does not drive choice is not a moat, it is a cost. You are investing in something your customers do not value, which means every dollar spent maintaining it is a subsidy to a competitor who has chosen to spend that dollar somewhere that actually matters.
Understanding what drives choice
The first dimension, what drives choice, is where most organisations do the least rigorous work. This is where Jobs to be Done earns its place.
The core idea is straightforward. Customers do not buy products, they “hire” them to make progress on something they care about. Understand the Job and you understand:
- What value means to your customers and what/who you're competing against beyond just category alternatives
- What would cause your customers to switch and what experience improvements you could make that would make a switch unnecessary.
If you don’t understand the Job, you are highly likely to optimise on the wrong dimensions, polishing features that nobody cares about while a competitor earns loyalty on something you never measured.
The weakest moats being exposed right now are the ones built around friction the customer was never paying for willingly. If the Job was "help me get a trip organised" and the moat was "we will make you sort through a thousand listings," that moat was fragile and easily breached.
A response that reads the moat correctly
Four days ago, Salesforce used its annual developer conference to announce what it calls Headless 360. The entire Salesforce platform, along with Agentforce and Slack, is now exposed as APIs, MCP tools and CLI commands, fully usable by AI agents. Marc Benioff's summary: the API is the UI.
Translate that strategically and it is an explicit statement about where Salesforce's moat actually sits. The leadership have looked at the emerging agentic enterprise and concluded that the browser based UI they spent two decades building is not what keeps customers choosing Salesforce. The data, workflows, business logic, operational depth and integration fabric are what drive choice and are hard to reproduce. The UI, which had been a cost, was becoming a liability.
What Salesforce is actually doing is restructuring its position in the value chain. When a market is disrupted, value does not disappear, it moves. Some parts of the chain commoditise, others become more valuable. The strategic challenge for an incumbent is to chase where value will sit in the new world, rather than defend where it sits in the current one.
Salesforce has concluded that the user interface is no longer where the value lives. The browser layer it spent two decades building is heading for commodity. The value is shifting to the data, workflows and business logic that sit behind it, and to the ability to deliver those into whatever surface the customer is working in. Headless 360 is Saleforce’s method of moving itself up the chain to meet the value where it is going.
That is what extending a moat actually looks like. Read the dimensions honestly. Concede the parts of the value chain that will commoditise. Reinvest in the parts that will not.
This is not luck. It is discipline.
Rumelt's argument in Good Strategy Bad Strategy is that most strategy fails because organisations skip the diagnosis and jump to the actions. A disciplined approach to extending your moat follows the same logic, and it runs in sequence.
It starts with aligning on the strategic challenges that actually matter. What are the shifts in your market that, if you do not respond, will cost you an opportunity or expose a weakness that cannot be recovered? Not the list of things that could happen. The short list of things that will.
Then it moves to focus. How will you respond, and just as importantly, where will you not. Focus is the discipline of saying no to work that does not extend or reshape the moat, even when it looks attractive in isolation.
With strategic priorities clear, the diagnostic work becomes workable. For each priority, two dimensions need an honest read: what actually drives customer choice in this market, and what is genuinely hard for a disruptor to replicate. A structured programme of research using Jobs gives you the first. A clear eyed look at your capabilities, relationships and operational depth gives you the second. The moat sits where the two intersect.
From there, a structured innovation process can explore opportunity areas that align with the two dimensions, rather than with internal enthusiasm or the feature list from the poster child disruptor of the day. Then it becomes a lean conversation. Experiments, iterations, honest feedback, and real decisions about which initiatives you are going to back. The decisions become easier because they are made against strategic priorities and dimensions of customer choice that the organisation has already agreed on. Without that clarity, every idea looks plausible and the right ones don’t get the required backing and the wrong ones get undue focus.
The organisations already falling behind
The organisations that are not investing in understanding their customers and running a disciplined innovation process are not merely at risk of being disrupted. They are already behind. Their moats are inherited rather than earned, and the assumptions that made them defensible are being tested in real time, in public, at AI speed.
The real question for any leadership team is not whether disruption is coming. It is whether you can answer the moat question honestly, on both dimensions, with evidence. If you can, you know where to invest. If you cannot, that is your diagnosis, and the discipline starts there.
