Revolutionary business formation and advancement has increasingly occurred in recent times. The dynamics behind these creative businesses is often misunderstood. However success in innovation exists In many industries where companies have created growth by following, either purposefully or accidentally, the patterns of disruptive innovation. In fact "disruptors" largely create growth by redefining performance. They either bring a simple, cheap solution to the low end of an established market or enable "non-consumers" to solve pressing problems. The term "disruption" was coined by author and Harvard Business School Professor Clayton M. Christensen, who is the co-founder of Innosight, an innovation consulting company. Christensen’s insightful thoughts address four key points that reflect disruptive innovation:
Technology improves faster than people's lives change
Companies innovate faster than people's lives change. This means that in the pursuit of attractive profits, established businesses almost always end up "overshooting" progressive market tiers. In essence, they provide products that pack in too much performance for the average person.
Think about your mobile phone. Odds are that you only use a fraction of the capability of the phone. Companies have to play this game. The sustaining innovations that move a company along an established improvement trajectory are the lifeblood of any firm. But companies that only sustain miss great growth opportunities sitting right under their noses creating circumstances that favor "disruptors".
Disruption is not just technology
The real disruptive power of innovation lies not in the technology itself but in the business model that surrounds that technology. Successful disruptors have the ability to make money at low price points or have low overheads that allow them to start small and adapt. They also tend to play in a very different value chain, with new partners, suppliers and channels to market. It is these business model differences, and not technological prowess, that so often throw incumbents off-balance. What successful company wants to introduce a product that its mainstream customers can't use if it promises to make them less money than other options the company is considering?
Disruption comes from playing the game differently
A successful disruptor masters the art of trade-offs. Their offering isn't better along traditional performance dimensions. In fact, it's typically just good enough along dimensions that historically mattered in a mainstream market. A disruptor redefines the notion of performance by pulling an overlooked innovation lever like, simplicity. convenience, accessibility or afford ability.
Disruption drives growth
Disruptive innovators have transformed numerous industries. For example, start-ups in the hard disk industry that followed a disruptive approach increased their odds of success six-fold. Moreover, more than half of U.S. companies that had the highest market value when they broke through a billion in revenue were founded on disruption.
Companies seeking to create new growth businesses should focus on disruptive innovation. Mastering the core concepts in disruption are not only vital tools in growth and innovation, but they help companies and managers spot and respond to disruptive attackers early.