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Are You Truly Disruptive?

Are You Truly Disruptive?

Disruption is one of the most overused words in business today. Many entrepreneurs make claims to be disruptive; often implying that the product or technology they are developing is far superior to what the established companies have. What they really mean is that their product or technology is a breakthrough.

But it is not disruptive.

Harvard Professor Clayton Christensen first coined the term “disruptive technologies” in his landmark 1997 book, The Innovator’s Dilemma, to describe an innovation that cannot be used by customers in the mainstream market. The book described the case of the steel industry in the 1980s, when the mainstream steel mills were focused on creating high-quality steel for sheet metal. New mini-mills started using recycled steel to create low quality rebars that are used inside cement structures to give it strength. Since it was a low margin business, the big steel mills were eager to get out of that market. In the meantime, the mini-mills improved their quality and started attacking the larger mills’ bread-and-butter business of sheet metal. Soon they drove the larger mills out of business.

Similarly, Toyota and Honda entered the US car market with small econo-boxes that the Big 3 did not produce. A few decades later, they were making mainstream sedans, virtually driving the big three into bankruptcy.

According to Prof. Christensen, “Disruptive innovations either create new markets by bringing new features to non-consumers, or offer more convenience and lower prices to customers at the low end of an existing market.”

Advanced technologies are rarely disruptive. The Airbus 380 superjumbo is not a disruptive innovation. It is a breakthrough. The Embraer regional jets, however, are a disruptive innovation, as they bring significantly lower cost per seat mile to the airlines for short routes.

But sometimes, cutting-edge technology in one area can disrupt another adjacent market. Take the case of the iPad. When it was introduced, many people struggled to figure out what it was good for. But tens of millions of customers started using it as low-end substitute for a laptop. Sales of low-end laptops plummeted after its introduction.

Intel’s legendary ex-chairman Andrew Grove used to say that true disruption is when a company disrupts a competitor’s business model, i.e. how someone makes money from a product or service. When Xerox introduced its first copier in the late 1950s, it was so expensive that most industry analysts said it would fail. But Xerox decided to rent out its copiers for a fixed price, only charging the customer for actual number of copies made. By deploying a disruptive business model, it became the dominant office copier company.

Next time you see a business plan making a claim of being disruptive, ask the question: Is it a breakthrough, or a disruption?

Avatar for Shyam Jha

Shyam Jha

Shyam is a consultant and mentor to entrepreneurs. He has over 3 decades of international technology industry experience. He earned his MBA from Oregon State University, and Bachelor of Technology from Indian Institute of Technology. View details.

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This Post Has 3 Comments

  1. Of course, you are right. But many would say “so what?” They believe that “disruptive innovation” is just a buzz phrase — a proxy for saying “we’re so advanced, so hi-tech” like tech companies in the 80s and 90s describing themselves as “rad”.

    The answer to “so what” is what’s missing here. The theory of disruptive innovation is important because it helps predict winners and losers and who will command the largest market shares, identifies quality of investment opportunity, enables good portfolio management, and informs marketing strategy and creation of the right business model. Among other things.

    So, getting this right is important. The economic consequences of getting it wrong are too significant.

    But, there is one thing I’d argue about companies that advertise themselves as disruptive — claiming you’re disruptive is like being in high school and claiming
    that you’re cool. It pretty much guarantees that you aren’t. When you describe yourself this way, it implies that you believe it is a customer benefit, which of course it isn’t. Customers don’t care if you’re disruptive (and may even think it’s a bad thing) — they care whether you address their needs better than the alternatives at a reasonable cost. Disruptive companies position themselves against how well they perform the customer’s “job to be done”, not by describing themselves as disruptive.

    Smart disruptors focus on customers, and let the markets decide whether they’re disruptive or not.

    1.  Excellent point. In order to be truly disruptive, your product or service needs to bring in an order of magnitude new customers than the mainstream markets, at lower functionality, and much lower price points. Think cell phone cameras vs. SLRs. Over time, the cell phone picture quality became reasonably useful, but still no match for a digital SLR. But it brought in an order of magnitude more customers to the digital photography market.

  2. This is a great topic for debate: If a business should to be innovative of disruptive. These days,to make big sales is much more important than to help technology move up another level in terms of functionality and practicality. I guess to be disruptive is good for the succeeding business,bad for the competition, and a trend for the consumer.

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