When my three boys were young I fondly remember nights with them studying at the kitchen table after dinner. When they were old enough to deal with more complex subject matter, I bought a set of Britannica encyclopedias to help them. The 32 volume set wasn’t cheap!
That was in 1990.
In 2001 a free encyclopedia website launched that would eventually bring Britannica, World Book, and others to their knees. Over the past twenty years, it has become the definitive go to source for just about anything. Alexa currently ranks this mega disruptive innovator as the 13th most popular website in the world with over 56 million articles.
The term “disruptive innovation” was first coined by Harvard Business Professor, Clayton Christensen, in his groundbreaking book, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. It was named Best Business Book of the Year when it was released in 1997.
The concept of disruptive innovation is now widely regarded as “the most influential business idea of the early 21st century.” As a result, The Economist named Christensen “the most influential management thinker of his time” and gave his book a prestigious honor, naming it “one of the six most important books about business ever written.”
The book goes into detail explaining how large and successful companies can “do everything right,” but still lose their market leadership (or fail altogether) as new and unexpected competitors rise and take over.
As referenced in a Forbes article a few years ago, “People are sometimes confused about the difference between innovation and disruption. It’s not a black and white distinction, but there are real differences. Think of it this way: Disruptors are innovators, but not all innovators are disruptors – in the same way that a square is a rectangle, but not all rectangles are squares.
Innovation and disruption are similar in that they are both makers and builders, but disruption takes a left turn by literally uprooting and changing how we think, behave, do business, learn, and go about our day-to-day activities. Disruption guru Clayton Christensen says that disruption displaces an existing market, industry, or technology and produces something new, more efficient and worthwhile. It is both destructive and creative at the same time.”
Nevertheless, there is still much debate about which companies truly qualify as “disruptors.”
The concept has gained meme status popularity over the past 25 years, losing its original meaning in the process, much to Christensen’s dismay. Today the word “disruptor” is used to describe just about every and any innovation.
In an attempt to correct its widespread misuse, Christensen (known as “the architect of disruption theory”) published a follow up article in the Harvard Business Review in 2015 in which he said, “The ‘disruptive’ label has been applied too carelessly any time a market newcomer shakes up well-established incumbents…unfortunately, disruption theory is in danger of becoming a victim of its own success.”
He goes on to explain a quick recap of his original theory:
“Disruption describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. As incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others.
Newcomers successfully target those overlooked segments, gaining a foothold by delivering more-suitable functionality (frequently at a lower price). Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously.
Then these newcomers move upmarket, delivering the performance that incumbents’ mainstream customers require, while preserving the advantages that drove their early success. When mainstream customers start adopting the newcomers’ offerings in volume, disruption has occurred.”
While there are many debatable factors that could describe a disruptive company, most agree on one defining characteristic…disruptors start at a “low point in a market,” making their product or service accessible to a much wider consumer base due to its more affordable cost.
Most people think Uber is a disruptor, including me. Christensen says it’s not, labeling the company a “sustaining innovation.” He says that while Uber has drastically improved the existing taxi industry, the company didn’t actually recreate it like Netflix reinvented the entertainment industry.
I believe Uber is a disruptor because it started by serving an unserved part of the market – people who started using paid transportation because Uber made it so quick and cheap.
A hallmark example of an iconic disruptor is the Ford Model T, which debuted in 1908. The first gas powered automobile, the Duryea Motor Wagon, actually appeared in the U.S. in 1893, but they were so expensive and limited in production that they didn’t disrupt the market for horse drawn vehicles.
By 1913 Ford had created an assembly line that increased productivity eightfold, and the first mass produced, affordable Model T swept the nation, absolutely decimating the horse and carriage industry.
That’s why a company like Tesla is considered to be innovative but not disruptive. Teslas were extremely cost prohibitive at the company’s outset, and only recently have they released more affordable models.
That free encyclopedia website that displaced Britannica is, of course, Wikipedia. It makes fact finding quick, easy and free…including my research for this article.
Whatever your view of disruption, it’s going to happen. Think of it like gravity. As Clayton Christensen said:
“You may hate gravity, but gravity doesn’t care.”