“The only way to avoid disruption is to constantly do what you would if you were just starting out.”
-Aaron Levie, Box.net
We’re doing business in an age of disruption. It’s a time when Netflix and Uber and arise from nowhere and smash their competition with new, tech-driven, and soberingly simple approaches to established business models.
If you think you’re in an industry where disruption can’t touch you, give your head a shake. The technology necessary to disrupt your industry hasn’t been invented yet. But it will be. If you’re complacent, it will eat you like Blockbuster.
The first step to staying ahead of disruption is understanding exactly what it is. To do this, let’s compare and contrast it with a close cousin: innovation.
The definition of disruption is:
“A radical change in an industry, business strategy, etc., especially involving the introduction of a new product or service that creates a new market.”
Time and again, success = our ability to identify a new market, or a new approach to an existing market, and seize it effectively.
Disruption is violent. If the established approach to a market is a tree, disruption rips it out of the ground and plants it somewhere else. The ecosystem depending on that tree either finds a way to follow it, adapt to another tree, or it dies.
In business, disruption is both the yin and yang, creation and destruction, happening all at once. Disruptors tend to start as smaller businesses that offer a new way to approach the segments of customers (often lower-end customers) that established businesses have left behind.
The definition of innovation is:
“The process of translating an idea or invention into a good or service that creates value or for which customers will pay.”
There’s nothing here about new markets. No trees get ripped up and there are no apparent victims. Innovation in business is an act of creation, of yin, without the destructive yang.
Hotels.com (https://ca.hotels.com/), which allowed people to sign up for their rooms online, is innovative. It opened up another route for booking hotels while making money at the same time.
AirBnB (https://www.airbnb.ca/) is disruptive. It took the irrational idea that people would open their homes to strangers, turned it into a business model, and ripped a hole in the balance sheets of the hotel industry. It decentralized (idealists might say democratized) the business model from an established core of the few to an upstart many.
All disruptors are innovators but not all innovators are disruptors. A company can innovate and challenge a competitor by doing so, but to disrupt you must destroy.
Disruption on the Battlefield:
Imagine a medieval battle where one powerful army dominates the field. A front wall of knights on armour-clad horses is riding unstoppably against a weaker foe. Their supply lines are very stretched, and all the guards on the flank have been pulled up to the front where the action is.
An innovative tactic by the weaker army might mean digging a pit to entrap the horses, or sharpening branches for more and longer spears. It will give them a foothold and keep them in the game longer, but ultimately the calvary will keep bearing down.
A disruption would look like this: another small army appears and hits the powerful army hard in their unprotected flank, where the mounted knights can’t reach them. By the time the bigger army is able to get in position to confront the new challenge, it’s already been cut in half. The disruptor, though small in number, exploited a weakness and has won the day.
Disruption is about looking at an established market in a fresh way. It’s like innovation, except it takes no prisoners.