There is much fear attached to the concept of Disruption especially when the term is used as a battle cry by digital start-ups as they wage their war against the tyranny of traditional business.
The irony is, even those who feel they are successfully wielding this weapon, poorly understand Disruption.
Defining disruptive innovation
Contrary to the belief held by the digital start-up scene, Disruption itself is not a weapon, it is an outcome. Understanding how it happens is key to being able to avoid it, or have the opportunity to disrupt others.
The term Disruption was coined by Clayton M. Christensen in his 1995 article “Disruptive Technologies: Catching The Wave.” He later changed this to disruptive innovation out of a recognition it is not always the technology itself, but a new business model enabled by the technology which causes disruption.
In simple terms disruption occurs when a business creates or employs a technology in a new way, forming a business model that provides an edge over competitors.
Often this edge is not because they offer a better product or service, but their offering is able to satisfy customers who were not being properly considered by existing players or products in the market.
To see a clear example of this type of disruption, consider digital cameras. Originally, no professional would consider the poor results offered by emerging digital cameras. However to the less discerning amateur, they provided instant feedback and offered zero wastage, allowing them to experiment towards their perfect shot. This uptake by less sophisticated users allowed digital cameras to gain traction and quickly improve to the point of taking market share away from film-oriented players like Kodak.
The emergence of the digital camera provided immediacy in finding the perfect shot.
Even more recently, this same cycle repeated with the evolution of the mobile phone camera. Although early offerings were extremely poor, a phone being on the person at all times allows for quick capture of memories. Through Internet connectivity, instant social media sharing helps propagates this behaviour. Today, the phone camera has become so good the amateur end of the digital camera market is evaporating; and the iPhone has officially become the world’s most popular camera.
In both of these evolutionary steps in camera technology, the existing businesses were over-serving the majority of possible customers. The existing products were too good, meaning too costly and too complicated for many to bother with.
“Disruption occurs when a business creates or employs a technology in a new way.”
The new entrants although not as good, were able to offer value on a new vector and use this as a competitive edge. In this case, a simpler, more available solution attracting the non-consumers to gain traction, move up-market, and replace the incumbent product.
Are you safe from being disrupted?
Disruption in itself is not a negative, but it means change and those that cannot or will not change, are left behind. The dilemma is that the adverse effects are indiscriminate, the ones left behind are not necessarily the small or the weak, they can even be the most established player in the field.
Digital Disruption is more specifically related to online technologies, with websites and mobile apps being the enablers of this disruptive change. For example, a website allowing the online retailer the advantage of lower overheads to that of the bricks and mortar store.
Digital disruption is more specifically related to online technologies.
Important to remember is that the disrupting business is not necessarily a better offering. For most people, buying clothes online surely is not as good as visiting a store to try an item on. But if the price is right and the convenience of staying at home is attractive, then online wins.
Identifying important and unsatisfied jobs and needs of customers can lead businesses to develop offerings that are grounded in the true motivations customers have for purchasing.
“If the price is right and staying at home is attractive, online shopping wins.”
If this means making a change even if at the expense of your existing products or services, you should seriously considering doing this to yourself, before someone else does. It may even provide you an edge over your existing competitors who cannot find the courage to enact the same change.
It turns out that the techniques for warding off this new type of disruption are very old. They are: understanding your customers and offering them what they value most.