If you’ve read an article about a hot new app, or a tech-based service that’s taken off in the past few years, you’ve likely encountered it being described as “disruptive.” But after seeing this term thrown around for half the companies in Silicon Valley, and hearing it applied to concepts in your own business or organization, you might be skeptical about its value --or at least, its usage.
However, understanding “disruption” can help you get a better understanding about what true innovation is, and possibly, improve your own business to produce more innovative products and services.
The Origins of Disruption
“Disruptive innovation” is a term coined by Clayton Christensen, referring to a process in which an underrated product or service starts to become popular enough to replace, or displace, a conventional product or service. In “true” disruptive innovation, the product takes root in the bottom of a market -- and in many cases, develops a bad or low-class reputation because of it. However, due to low costs, higher accessibility, or other advantages, the product eventually becomes more appealing than its contemporaries within the industry.
This is contrasted with “sustaining innovations,” the new inventions and modifications generated by incumbent businesses in an attempt to stay relevant with customers. These innovations can be valuable too, but in most cases, products and services developed along these lines become too sophisticated, too inaccessible, or too expensive to have any real lasting power. Accordingly, customers look to less expensive, sometimes radical alternatives to meet their needs.
The defining traits of disruptive innovators are lower gross margins, smaller target markets, and products and services that are often simpler than their contemporaries.
The problem with applying this term to any new business that challenges an industry is that it undermines what true disruption is. It tends to attract more attention to startups that are already getting attention, while the true disruptors are slowly climbing the ladder elsewhere, unnoticed by the industry giants they’re meant to replace.
“Real” Examples of Disruption
It’s perhaps easiest to understand disruption when we look at real-world examples of it in action:
- Netflix, streaming video, and OTT devices.
Netflix -- and other streaming services -- are continuing to disrupt the entertainment industry. They’ve all but killed physical video rental stores, and are slowly allowing more and more customers to cut their cable subscriptions. OTT options like Hulu and Pluto TV emerged seemingly out of nowhere, as a low-cost alternative to conventional subscriptions, and when they caught on, customers couldn’t help but think about their media in a new way. - King Price Insurance.
Relatively new on the market, King Price Insurance emerged as an alternative to conventional car insurance plans. Unlike typical insurance policies, King Price Insurance offers insurers policies with gradually decreasing premiums, in line with the depreciation of your car’s value. The model takes more data into account than traditional insurance policies, and in line with disruptive innovation, targets a smaller market with lower gross profit margins to offer a superior service. - Wikipedia. It’s a little ironic that you can read about disruptive innovation on Wikipedia, which is, in itself a disruptive innovator. Younger people won’t remember, but for centuries, encyclopedias were written and published for profit. You’d have to pay $1,000 or more for a few hundred pounds’ worth of hardcover volumes, and hope that it lasted more than a year or two of relevance before its important details were updated. Wikipedia is updated constantly, and is available for free, though it didn’t carry much trust at first. Still, Encyclopedia Britannica published its final volumes in 2012, after 244 years of circulation.
- LEDs.
It’s hard to think that there was a time that LEDs were once considered impractical, but the first generation of LEDs were weak and unreliable, useful only as indicator lights. Cheap and available only for niche markets, LEDs eventually became more reliable, and soon became ridiculously more efficient than traditional incandescent light bulbs—in fact, they only use 20 percent of the electricity. - Skype.
You’ve probably used Skype before, and have been used to its existence for years, but think about how disruptive the service truly is; users all over the world can chat, call, and video chat with each other for free (or for very low fees). Originally targeting a small market of users, Skype has ballooned to have more than 74 million active users—and it’s entirely replaced mainstream forms of communication for some customers.
What Isn’t Disruption
We can also make the case for disruptive innovation cleaner when we highlight some examples of companies that aren’t disruptive:
- Uber.
Uber is often cited as an example of disruption, but that descriptor doesn’t hold upon close examination. Now climbing north of a $72 billion valuation, Uber is undoubtedly a pinnacle of modern tech success. And on the surface, it has a few hallmarks of disruptive businesses; it did, after all, replace the taxi industry for many travelers throughout the U.S. and internationally, after a start as a small, scrappy company. But here’s where Uber isn’t disruptive; it didn’t open up a new market or capitalize on low gross margins. It just took the typical taxi service model, and upgraded it with tech to make it more convenient and a little less expensive. Accordingly, while both innovative and successful, Uber is not a disruptor. - Google.
Google has explored many areas of tech, and could be considered a disruptor in some of them, but for this article, let’s focus on Google’s emergence as the dominant search engine. Google was the first online company to prove the value of online search, and the first to make ridiculous amounts of money from online advertising—it did, therefore, help to spawn a new industry (if not several). But Google isn’t a disruptor because it wasn’t the first search engine—not by a long shot. All it did was take an existing model and make it better. This is an impressive feat, but again, doesn’t qualify as disruption. - Tesla. Tesla is another company frequently described as a disruptor, in part because of the sexy vehicles in its lineup that are, admittedly, unlike anything else on the market. And while Tesla is known for ground-level innovations in everything from the design of its vehicles to its organizational structure, it can’t be considered a disruptor. Its vehicles are exactly that—vehicles—and while they rely on a unique power source, they don’t enable transportation in any truly market-changing way. Plus, even the cheapest models here started at $35,000, making it too overpriced to appeal to the low-level market.
Key Takeaways
Let’s see if we can reduce this information to a handful of key takeaways for entrepreneurs who want to know more about innovation—especially in its most disruptive forms.
- Innovation doesn’t have to be disruptive.
Recall that disruptive innovation is only one type of innovation—and you don’t have to be a “true” disruptor to make a difference in your industry. Google is a perfect example; Alphabet (Google’s parent company) is now one of the biggest and most important tech companies in the world, and it all started because Google’s founders could offer something a little better than what was currently on the market. - True disruption is a bit of a gamble.
Even with a good idea in place, there’s no guarantee that a new technology or potentially disruptive idea will take hold. Some inventions require multiple phases of evolution before they reach their final form—and that means lots of inventions get lost in the shuffle before they get there, losing out to unsustainable practices, market shifts, or stagnation. - Disruption is oftentimes stealthy.
Understanding disruption isn’t just about creating better ideas; it’s also about being defensive, and looking out for new competition that might disrupt your industry in the future. If a startup is labeled “disruptive,” you might want to give it notice—but the biggest threats to your business are the ones you won’t see coming. Dig deep and take all threats seriously, even if they’re starting out with lower profit margins and a smaller target market than you’d expect from a legitimate competitor. - Disruption takes time. When Wikipedia launched in 2001, nobody would have predicted it would have the power to overthrow Encyclopedia Britannica; this was a feat that took more than 11 years to accomplish. Disruptors don’t change the market after a month of being publicly available; it takes years, and sometimes decades, to take hold.
With a better understanding of disruption, you’ll not only find it easier to wade through the buzzword-laden articles hyping up the latest startups to emerge from Silicon Valley, you’ll also be poised to find faster, more sustainable forms of innovation in your own business.
You may not be in the market to create the next LED, or change the world with an invention on par with the transistor radio.
However, you can, at a minimum, guard yourself against future industry disruptors and possibly come up with more competitive solutions to keep your business thriving.
About the Author
Peter Daisyme is the co-founder of Palo Alto, California-based Hostt, specializing in helping businesses with hosting their website for free, for life. Previously he was the co-founder of Pixloo, a company that helped people sell their homes online, that was acquired in 2012.
FAQs
Data: Across 17 distinct industries, the top five disruption factors business leaders are anticipating to impact their businesses are (1) smarter machines, (2) platforms, (3) customers taking control, (4) burden of compliance, and (5) sustainability as a business advantage.
What are some examples of disruption? ›
“Real” Examples of Disruption
- Netflix, streaming video, and OTT devices. Netflix -- and other streaming services -- are continuing to disrupt the entertainment industry. ...
- King Price Insurance. ...
- Wikipedia. ...
- LEDs. ...
- Skype.
Data: Across 17 distinct industries, the top five disruption factors business leaders are anticipating to impact their businesses are (1) smarter machines, (2) platforms, (3) customers taking control, (4) burden of compliance, and (5) sustainability as a business advantage.
What are 2 examples of disruptive? ›
The wheel, the light bulb, and the cellphone are three examples of disruptive technologies. At the time, these innovations caused a profound break with previous patterns, bringing about major changes in people's lives.
What is an example of a disruption strategy? ›
Two examples of new-market disruption outlined in Disruptive Strategy are the emergence of personal computers and, later, smartphones. Together, they illustrate how disruptors become incumbents that can then be disrupted by a new innovation. The first computers, called mainframes, were incredibly large and expensive.
What are the three types of disruptions? ›
4: Three types of disruptions with their correspondence in real world: a) disruption to production process, b) disruption to infrastructure network links, c) disruption due to change in demand.
What are the main causes of disruption? ›
The following are the typical factors that may create these interruptions:
- Pandemics.
- Natural Disasters.
- Logistics Delays and Failures.
- Price Fluctuations.
- Cyberattacks.
- Product Problems.
We then used the median scores as dividing points to highlight four distinct states of disruption: durability, vulnerability, volatility and viability.
What is a major disruption? ›
A disruption is a major disturbance, something that changes your plans or interrupts some event or process. A screaming child on an airplane can be a disruption of the passengers' sleep. A break in the action, especially an unplanned and confusing one, is a disruption.
What are the four elements of theory of disruption? ›
King and Baatartogtokh identified four elements of the theory of disruptive innovation: (1) that incumbents in a market are improving along the trajectory of sustaining innovation, (2) that they overshoot customer needs, (3) that they possess the capability to respond to disruptive threats, and (4) that incumbents end ...
Examples of disruptive behavior include: Aggression toward other students or faculty/TAs. Threats of violence. Unyielding argument or debate.
What are disruptive activities? ›
(dɪsrʌpt ) verb. If someone or something disrupts an event, system, or process, they cause difficulties that prevent it from continuing or operating in a normal way.
What is the first step to disruption? ›
Phase One: Disruption of Incumbent. A moment of disruption is where the conversation about disruption often begins, even though determining that moment is entirely hindsight. (For example, when did BlackBerry get disrupted by the iPhone, film by digital imaging or bookstores by Amazon?)
What are disruption strategies? ›
Disruptive strategy alludes to the innovation that changes expensive or exceptionally sophisticated products or services—already available to a top-of-the-line or more gifted portion of customers—to those that are more reasonable and open to a more extensive population.
What is disruption in strategy? ›
When it comes to business strategy, the term “disruption” refers to a process through which market entrants armed with non-conventional business models, and what at the outset seems to be poor-performing products come to challenge industry incumbents over time, eventually getting them out of business.
What is an example of constructive disruption? ›
A mindset of constructive disruption is even more important in this challenging environment. A good example of constructive disruption in a category is Dawn Powerwash Dish Spray, which addresses the changing habit of washing dishes as you go instead of waiting until the end of a meal.
What are disruption scenarios? ›
A CIs' disruptions scenario is simply a sequence of random events following a well-defined chronological order.
How do you deal with disruptions? ›
What to do
- Be steady, consistent and firm.
- Acknowledge the feelings of the individual.
- Remember that disruptive behavior is often caused by stress or frustration.
- Address the disruption individually, directly and immediately.
- Be specific about the behavior that is disruptive and set limits.
: the act or process of disrupting something : a break or interruption in the normal course or continuation of some activity, process, etc.
What are the characteristics of disruption? ›
Characteristics of disruptive innovation:
Higher risks. Either disrupts an existing market or creates a new market segment in the existing one. Sales arguments and measures of value are usually fundamentally changed. Often involves new technology and/or a new business model.
Disruption risk is risk which arise from natural disaster, such as weather disruption, or man made ones such as economic crises. Supply chain of agricultural commodities becomes a major concern of Indonesian scholars and practitioners. Many companies engaged in this industry are unable to survive in the market.
How can disruption cause change? ›
Disruptive change can decrease demand for a company's services, increase research costs or drive down the price customers are willing to pay. Businesses that respond to disruptive change may be able to capitalize on the new market and increase profits.
What are the stages of disruption? ›
The Three Stages of Disruptive Innovation: Idea Generation, Incubation, and Scaling | Stanford Graduate School of Business.
What are the levels of disruption? ›
Overall service disruption is rated according to four levels: "no loss," "low disruption," "moderate disruption," and "severe disruption." Disruptions are rated by characterizing two dimensions-spatial extent and severity of impact-along a scale that ranges from "low" to "high." Impact considers the severity of ...
What is disruption in society? ›
Social disruption is a term used in sociology to describe the alteration, dysfunction or breakdown of social life, often in a community setting. Social disruption implies a radical transformation, in which the old certainties of modern society are falling away and something quite new is emerging.
What is the closest meaning of disruption? ›
(noun) in the sense of disturbance. Synonyms. disturbance. interference. interruption.
What are the two loops of disruption theory? ›
The “2 Loops of Change” model suggests that at any given time in a society, there are “dominant” systems that drive the economy and culture, and there are “emergent” systems and trends that are less well known but making progress to eventually become the dominant system.
Who is the father of disruption theory? ›
The man who introduced the idea of disruption, Harvard Business School professor Clayton Christensen, passed away on January 23.
What are the 4 points to identify disruptive innovation? ›
This illustration shows four important elements of the theory of disruptive innovation: (1) sustaining innovation, (2) overshoot of customer needs, (3) the emergence of a disruptive innovation to which incumbents have the ability to respond, and (4) incumbent firms floundering as they are disrupted.
What is an example of a disruption in the workplace? ›
A variety of temporary operational disruptions can interfere with employees' ability to get to and from work. Examples include construction that affects building access, special events, transit interruptions, etc.
aggressive behaviors toward others, including bullying or making threats. misinterpreting others' behaviors as threatening. inability to tolerate frustration, restrictions, or rules (either at home or at school) chronic lying without remorse.
What is a easy sentence on disruption? ›
The bad weather caused disruption to the rail network during rush hour. As a result he came to fear that disruptions of natural systems might bring catastrophic imbalances. Union bosses said they were discussing how to time strikes for most disruption.
What is an example of a low end disruption? ›
A low-end disruption emerging in the real estate construction market is 3D printing technology. 3D printers use digital files as blueprints to deposit layer upon layer of material—often concrete—in a specific design to construct a building.
What is the goal of disruption? ›
A goal disruption occurs when a goal violation (belief or expectation) arises and causes psychological disequilibrium. These changes can occur through perceptual adjustments within the individual or changes that occur from the outside environment.
What is disruption in the workplace? ›
Workplace Disruptions are all the internal and external elements that restrict the workforce to give their best output for a dedicated task. Disruptions in the workplace have been a very concerning matter for employers because it negatively affects the well-being and performance of employees.
What is an example sentence for disruptive innovation? ›
We are living through a disruptive innovation as far-reaching as the steam engine or the discovery of petroleum. But real, disruptive innovation that actually changes the nature of the industry?
What are the types of innovation disruption? ›
There are two types of disruptive innovation:
- Low-end disruption, in which a company uses a low-cost business model to enter at the bottom of an existing market and claim a segment.
- New-market disruption, in which a company creates and claims a new segment in an existing market by catering to an underserved customer base.
verb. If someone or something disrupts an event, system, or process, they cause difficulties that prevent it from continuing or operating in a normal way. [...]
What is an example of social disruption? ›
For example, the closing of a community grocery store might cause social disruption in a community by removing a “meeting ground” for community members to develop interpersonal relationships and community solidarity. The term is often associated with the effects of rapid population growth.
What is disruption in simple words? ›
: the act or process of disrupting something : a break or interruption in the normal course or continuation of some activity, process, etc.
behavior that chronically threatens and intimidates others or violates social norms. The term is typically applied to the behavior of children, but it can also be used to describe adult behavior.
What are examples of family disruption? ›
Family disruption is a term referring to events that disrupt the structure of individual families. These events include divorce, legal separation, and parental death, out of home placement, and deployment.
What is an example of high end disruption? ›
An example of high-end disruption outside the realm of transistors is the light bulb (with electricity), which disrupted candles from the high-end. A modern example is Chipotle, which is disrupting McDonald's from the high-end.
What is an example sentence for disruptive? ›
A new government's efforts to undo much of its predecessor's work is damaging and disruptive. I believe that too many school responses to disruptive behaviour are negative. All too often they have been segregated from their peers to form" remedial" classes- just as disruptive children have.
