Help! My startup’s not disruptive!!!

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It’s terrible, tragic even.  My startup’s not disruptive!  It won’t change the world, or even an industry.  It won’t lay waste to the antiquated detritus of 20th century business, even by accident.  What am I to do???

Ok, that’s a bit tongue in cheek, but as you can appreciate, the impact of companies like Uber, Airbnb and even Apple can make it look like disruption is an indispensable part of the new economy.  Disrupt or perish, right?

In my view, a lot of what gets thrown up as being disruptive is nothing of the sort.  If you take Clayton Christensen’s’ original work on the subject, you can mount an argument that disruption can’t be planned anyway, so why bother?  It’s a serendipitous outcome of an innovation, not something that can be planned in advance.  No one is prepared for disruptive innovation; if they were, it wouldn’t be disruptive, right?

One of the reasons that disruptive innovation is such an influential idea is that it suggests that there’s a shortcut.  A shortcut to massive growth that avoids the need to carefully plan and execute a business idea over a long period of time.  Who wants to spend 30 years building a successful business when disruption offers the change to do it in five?  It gets around the pesky issue of eking out progressively larger market share based on well-honed strategy, tight cost control and incremental product development.

And of course, it’s even more appealing in the startup space.  Want to compete with Microsoft?  Hell no, we’ll just disrupt them!

But of course, disruption has become part of the new orthodoxy.  If you’re not disruptive or not aiming to be, you just don’t fit in quite as well as you might have in the past.  Want investment for your startup?  Be disruptive!

If you’re not disruptive, it makes it just that little bit harder to obtain capital then if you are, because most early stage investors want high returns in relatively short periods.  That doesn’t mean that non-disruptive startup don’t get funded, but it’s a lot easier to make the case for rapid profit if you can grow unencumbered by traditional market completion.

I’m a bit of a contrarian at heart, so I tend to recoil from the hype surrounding disruption.  But I think it’s important to remember that there are lots and lots of very successful businesses out there that aren’t disruptive and never will be.

There was a good article in Harvard Business Review last year that made just this point.  The author pointed out that “the vast majority of profit from innovation does not come from the initial disruption; it comes from the stream of routine, or sustaining, innovations that accumulate for years (sometimes decades) afterward”.  As a case in point he offers Intel, who has made about $287 billion from the series of chips that built on the original X386 chip introduced in 1985.  Not bad for a non-disruptive business, huh?  Then there is Microsoft with Windows ($325 billion) and even Apple with the iPhone ($150 billion).

I also read a piece recently (also from HBR) which talked about why bootstrapping a startup is the most successful approach to a new business in terms of raw numbers.  They criticise the ‘big money’ model that gets all the headlines for startups and point out that most of these business are better off taking it slowly – working out their business model, tuning their product to the market, and learning to get by on less, rather than more.  This article was published before the Innovator’s Dilemma, so you could argue that things have changed and maybe they have.  But I’d wager that the companies that will dominate the world in 20 years’ time are likely small and humble at the moment and will take all that time to ‘disrupt’ their competitors!

Returning to my own startup, what does this mean?  Having recently completed a modest Kickstarter campaign, we’ve been asking the question of ‘what’s next’?  One answer to this question is to ‘go big’ by raising money and taking the idea global.  That’s entirely possible, but some water needs to go under the bridge yet.

And of course, most people get the idea of what we’re doing with WineMinder, but it doesn’t immediately bring forth visions of global dominance.  Which makes it that little bit less attractive compared to rapidly scalable, potentially disruptive ideas.  And that just suits me fine, to be honest.  But occasionally it can make you wonder if its worth bothering with all the hard work and worry (and of course the fun and occasional euphoria!) if you’re not going to disrupt something – other than your family life and your bank account!

Again, being a contrarian, I wonder if a lot of profitable – but not disruptive – opportunities are being left unaddressed in the rush to creatively destroy the status quo.  And maybe my startup is in that space.  And if it is, I’ll gladly make decent returns on my efforts while watching some more disruptive ideas burn through other people’s money, before being disrupted by the next wave of, well, disruptive innovation!

In which case, I don’t really need help at all…at least, not because my startup isn’t disruptive!

Disruption Three Ways

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The concept of disruptive innovation has become a widely used term in business, to the point where it is both a cliché and a valuable tool for business planning and execution.  The elegant power of the original concept is part of the reason that the idea has gained so much traction, and why it is used so liberally to describe businesses from Apple to the newest digital start-up.  The value of a term however (and language more generally), is the creation of common understanding.  Given the broad range of phenomena it covers, is it really possible to put the disruptive innovation ‘genie back into the bottle’ to allow better conversations about what it is and what it means?

Instead, it’s likely that we will continue to hear disruption applied in a number of ways. My observations of discussions on disruptive innovation suggest that there is a spectrum of disruption containing at least three discernable points at the moment – disruption as a substitute term for competition, disruption to describe change created by the application of enabling digital technologies and disruption based on technological innovations themselves.

When disruption is used as a substitute word for competition it is usually used to describe the entry of a new competitor to a marketplace.  For example, at a basic (and trivial) level, opening a new coffee shop next to an established one is disruptive.  The owner of the existing shop has to change the way they do business, and it disrupts their market, their time and their customer base; sometimes to the extent that the original business fails.  So you could argue that disruption is a legitimate way to describe this situation, and it is often used in this way.

The next point in the spectrum relates to the use of digital technologies to create new business models which compete with established companies. In this respect, disruption is often driven by disaggregation of supply chains.  The myriad companies that leverage mobile app technologies to access niche, global markets are a good example of this.  Rather than creating radical business models, they are accessing fragmented, distributed market places through the use of digital technologies (like this blog…!).  Some will develop to the point where they disrupt established markets through the application of these enabling technologies.  However, they rely on other technologies to do so, rather than creating these disruptive innovations themselves.

At the other end of the spectrum is disruptive technological innovation.  This type of disruption is closer to the type from which Christensen drew his original insights.  In that case, companies were developing hard disc drives that served nascent sectors of the computer industry, but their innovations eventually displaced their incumbent rivals.  Business model innovations could also be placed in this category, particularly where they initially serve alternative markets before disrupting mainstream incumbents. This is probably the most difficult type of disruption to pull off, particularly if the innovation is capital intensive, or relies on established, complementary infrastructure to operate.

In the end however, disruption is about impact.  It doesn’t matter what the source of your competitive advantage is, whether it be location, a business model, an enabling technology or an original disruptive technology.  And like most spectrums, you could define a whole range of disruptive business activities, combining those described above or new ones altogether (for example, see here).

What do you think? Are there other categories of disruptive innovation out there that are worth adding to the spectrum of disruption?