By Brian Laung Aoaeh February 18, 2013 Leave a Comment

About Disruption, and Great Entrepreneurs.[i],

 

Author: Brian Laung Aoaeh

 

I too am still basking in the euphoria of the Super Eagles win at the 2013 African Cup of Nations. I’m hoping the team’s preparations for the 2014 FIFA World Cup in Brazil leaves them in a position to launch a serious bid for the trophy. Can you imagine what it would be like to have both Ghana’s Black Stars and Nigeria’s Super Eagles progressing to the quarter-finals and beyond in Brazil? How does one win the World Cup? One match at a time.

 

I read an article[ii] this weekend that got me thinking about disruption. Invariably when a startup founder is pitching to investors the temptation arises to describe the startup as one that is going to disrupt something else that already exists. Usually, if I am in the audience my bullshit radar goes on alert. Why?  It is often the case that the term “Disrupt” is being used without a complete appreciation of its full significance.

 

A better product is not necessarily a disruptive product. A product that is “better, faster, and cheaper” is not necessarily a disruptive product either. So, when does a product become disruptive?

 

A new product is disruptive when incumbents have no means of responding to the arrival of that new product. The disruption happens because demand gradually diverts from the status quo towards the new product, eventually the trickle of demand being diverted towards the startup’s product becomes a flood. This leaves incumbents in that industry scrambling for survival as consumers’ tastes and behaviors morph to favor the startup and its new product.

 

Disruption addresses competition in two ways. A new market disruption addresses a customer segment that was not previously served by market incumbents. A low-end disruption relies on a new business model that enables it to offer a “faster, better, simpler, cheaper, or more convenient” alternative to already existing products.

 

You should read Andy’s article. There’s a link at the end of this post. I think there’s more to the question about what leads to disruption than Andy could have captured in article of that length. Nevertheless, I think his article is a very good start, and you might want to read some of the comments others have made in order to see what other views exist on the topic.

 

Coincidentally, Andy is the author of another article that got me thinking about what makes a great entrepreneur.[iii]

 

According to the article great entrepreneurs start companies to:

  1. Change the world
  2. Build a great company
  3. Make money

 

Andy argues that the best entrepreneurs are missionaries not mercenaries.  Missionaries start companies for one or both of the first two reasons. Mercenaries start companies for the third reason.

 

Again, I think there’s more to this than the format allows Andy to explore. Still, this is a good start for one’s own thinking on the subject. There’s a link at the end of this post.

 

Have fun.

 

Let’s talk again in two weeks.



[i] Any mistakes in quoting from my sources are entirely mine.

[ii] Andy Rachleff, What “Disrupt” Really Means, February 16, 2013. Accessed at TechCrunch on Feb 17, 2013.

[iii] Andy Rachleff, What Makes For A Great Entrepreneur, Dec 11, 2012. Accessed at PandoDaily on Feb 17, 2013.

About

Brian Laung Aoaeh is a partner at KEC Ventures. Before KEC Ventures he worked at Watson Wyatt, UBS AG and Lehman Brothers respectively. He holds a BA with a double major in Mathematics and Physics from Connecticut College, and an MBA from New York University's Leonard N. Stern School of Business. He is presently a participant in the CFA Program.

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