Is It Really Disruptive Innovation?

The term ‘disruptive innovation’ is fast becoming commonplace in the startup space. Many founders would conveniently describe their innovation as disruptive even when it does not exactly fit the description. I get the impression that they do this because of some perceived reputation that they think disruptive innovations should have. However, not every innovation in space is disruptive, and your business does not have to be a disruptor to survive.

Disruptive innovation is a product or service, usually more simplified and affordable, that is introduced into the market to cater to the part of the market that has been largely ignored by other players. Often, such products are introduced by new and smaller players, and it gives them a foothold to enter the market. Large market players sometimes introduce disruptive innovations to cater to a market segment they may have ignored over time. It may involve tweaking or transforming an existing product (maybe expensive or highly sophisticated), into a simpler, cheaper, and more accessible product that can cater to that segment of the market that was ignored.

Why does this happen? Most times, market players would prefer to focus on satisfying the needs and desires of their most profitable customer base, largely ignoring some market segment that is perceived as less profitable and less desirable. This now creates room for entrepreneurs seeking to get a foothold into the same market, and they take advantage of the lack of attention, target the ignored market segment with affordable solutions. This unattended market segment, though little in the beginning, grows over time and gives the innovator a foothold in the market, long before other players start venturing into the same space to compete.

Creating new products and solutions to serve a market segment that was already being serviced is not disruptive innovation. It is more like sustaining innovation. (topic for another day).

A solid example of disruptive innovation is Amazon. The internet community was growing at the time, with an emerging niche market of online shopping, book enthusiasts. However, the traditional brick and mortar bookstores did not see a market large enough to deserve their attention, and so focused on selling their books out of the shelves. Jeff Bezos came in with his innovation to attend to this market, and this became a disruptor in the bookselling industry. With time, the physical book shoppers got interested in online shopping and started making the shift, gradually increasing the small market share Amazon catered to in the beginning. Now, Amazon has gone way beyond selling books, to everyday items like groceries. From disrupting bookselling, Amazon ended up disrupting selling as a whole.

What you can see from this is that to be a disruptive innovator, you must have done some research, and have solid evidence to believe there are potentials in the market segment you want to service. It may be cool to serve a small segment in the beginning, but how quickly this segment grows will determine how long you remain in business.

What Amazon saw and predicted was that the power of the internet (on which it was building its business model) would grow in leaps, increasing their customer base and keeping them in business for a way longer time than the then-big-players thought.

Most entrepreneurs now are taking the route of sustaining innovation, which means finding easier, cheaper, and faster ways to service the existing market. This is also a good option, and there are several successful businesses now that started along this path.

You will need solid market research and accurate projections to start and scale a disruptive innovation business – much more than you would need for sustaining innovation where the market need has already been established. In the end, it is really up to you to decide.