Disruptive Innovation is Inferior

Just sat through another buzzword-filled business plan presentation. The strategy involved developing a revolutionary new technology while cloaked in stealth mode (“what are you hiding from whom?”) then suddenly emerging from their new orbit to disrupt everything.

Riker to Picard, “Captain, scanners are detecting signs of Disruptor fire!”

Holy Star Trek, Batman, you can’t trust a Romulan!

Coming soon: T-Shirts that exclaim “I am a Disruptor, Fund Me, Resistance is Futile!”

I didn’t need to be hit by Phaser cross-fire to come away dazed and confused.

Houston, we have a problem… the business plan has no viable trajectory

Disruptive innovation as a business strategy is not analogous to a Klingon energy weapon.

In fact, a key paradigm of disruptive innovations is that they are inferior. Think of a skateboard competing in the warp speed era. Disruptive innovations offer less of what customers in established markets want and can rarely be initially sold there.

Clayton Christensen, the disruption guru, has evolved his insights in at least one subtle yet profound way. In his landmark Harvard Business Review (HBR) article and in his first book, Christensen itially discussed Disruptive Technologies. By the time he wrote his second book, Christensen had switched to to more accurately discuss Disruptive Innovations instead. 

A technology is not disruptive in and of itself. In fact, he observed that disruptive innovations were typically technologically straightforward. It was the business strategy to leverage a technology that had been disruptive.

That strategy, however, is not necessarily easily identified or pursued. The disruptive business plan needs to persuasively convince its funding audience why they should care about “low-margin opportunities that (mainstream, profitable) customers don’t want” as Christensen has characterized disruptive innovation.

A key challenge for the disruptive business case is that it can take longer to fulfill with characteristically lower margin sales. It needs tremendous insight, intelligence and patience. A disruptive path is likely to be longer than a non-disruptive path.

Many new technologies are astounding. What some mis-labelled disruptive business plans miss is the critical business strategy that is actually disruptive. Here are three key thoughts to consider before considering a disruptive market entry:

1. Disruptive innovation is not simple
2. Disruptive innovations are bottom feeders
3. Disruptive innovations do not improve existing products

Disruptive innovation is not simple

In his book The Innovator’s Dilemma, Christensen implores his audience to “read these chapters for understanding, rather than for simple answers.” Disruptive innovations may be inferior, but the term should not be used as a cloaking device for an inferior business plan.

There is nothing wrong with pursuing a fabulous new feature that a large market is yearning for. That feature may be sophisticated and reward its developers with rapid, widespread adoption. That wonderful new feature, however, is not a disruptive innovation. 

Disruptive innovations compete from the bottom

Disruptive innovations are bottom feeders that go after customers and markets (i.e. pursue a business proposition) that mainstream competitors are not interested in pursuing. The key to the successful disruptive innovation is that they often unlock an entirely new market opportunity – one that the mainstream markets ignore or undervalue.

Disruptive innovation involves selling something that is fundamentally not as good as what the competition offers. The disruptive business must find those customers willing to make a trade-off and deliver some different or new capability that they care about instead.

Take the transistor radio, for example. This was a music device whose sound quality was poor enough to give you a headache. Why would anyone want a music device that grossly distorted the quality of the music? Convenience in the form of portability is why!

Generally, disruptive technologies underperform established products in mainstream markets. But they have other features that a few fringe (and generally new) customers value. Products based on disruptive technologies are typically cheaper, simpler, smaller, and, frequently, more convenient to use. (The Innovator’s Dilemma)

The convenient to use paradigm is critical – and often critically absent with many new technology concepts.

Disruptive innovations do not improve existing products

There is nothing necessarily wrong with product improvements, necessarily, they create a Rube Goldberg.

Rube Goldberg (rűb gōl(d)’bərg) n. accomplishing by complex means what seemingly could be done simply (Webster’s)

It is the ability to overshoot the market, however, and improve products faster than market demand that Christensen identified as key to creating the opportunity for disruption. By their very nature, features that improve an existing product are sustaining. Such enhancements may be really, really technically challenging. Improvements can create killer apps that create wide adoption, but these are not necessarily disruptive.

What all sustaining technologies have in common is that they improve the performance of established products, along the dimensions of performance that mainstream customers in major markets have historically valued. (The Innovator’s Dilemma)

It is not disruptive to add a feature to an existing product or technology that improves its performance.

Key elements of disruptive opportunity

Turning all of this around, what should a disruptive strategy involve? These four points are not a complete list, and Christensen’s books are a must read, but they are a good starting point to quickly decide if an opportunity has the potential to be disruptive:

1. A small, emergent niche that doesn’t value today’s key product features
2. A technically straightforward solution that is inferior in a major aspect
3. A solution which is cheaper and can compete at the market bottom
4. Enhanced convenience along a new trajectory

As Christensen observes:

 “(Disruptive innovations) disrupt and redefine (the trajectory of improvement) by introducing products and services that are not as good as currently available products. But disruptive technologies offer other benefits – typically they are simpler, more convenient, and less expensive products that appeal to new or less-demanding customers.” (The Innovator’s Solution)

If the technology will enable a plan that fits this model, then hone your game-changing strategy and don’t stick with the me-too. Just try not to build the next full-featured energy cannon of a business plan filled with every buzzword imaginable.