Disrupting Ourselves

Make disruption analysis a critical part of your planning strategy

By Andrea Hill

When you hear the term business disruption, do you smile or do you cringe? Do those words stimulate your imagination or cause you to assume a defensive posture? Even among people who aren’t really clear on what the theory of disruption is all about tend to assume it’s just a bit, well, rude.

Though business disruptors and disruptions have been in the news almost constantly for the past 20 years, the term is used almost carelessly and often inaccurately. Most people don’t know the origin, known as the Theory of Disruption. Conceptualized by Clayton M. Christensen, Michael E. Raynor, and Rory McDonald in a December 1995 article in Harvard Business Review, the Theory of Disruption predicts that “when an entrant tackles incumbent competitors head-on, offering better products or services, the incumbents will accelerate their innovations to defend their business.” The result? Surprising innovations in the form of entirely new products and the creation of new markets.

In other words, disruption is not the same as innovation, nor is it the same as a competitor stealing someone’s market share, though each of those things may happen as part of disruption.

Who Is a Disruptor?

So, what is a business disruption, and more importantly, why should you care about it? Let’s start with some good examples of disruptive businesses.

Mint Mobile is an example of a low-end disruption. As all the major cellular companies compete to offer bigger, feature-packed mobile offerings to please their most demanding customers, Mint has identified an opportunity to give people who don’t care about all the bells and whistles an affordable, reliable plan. While the big mobile companies had all their attention on the high end, Mint has started stealing away the customers who are being ignored and who wish for a simple, reliable, affordable contract. No innovation has been necessary, but Mint has certainly been disruptive.

Brainstorm all the types of low-end disruption you might face and strategize how you might defend against them—an any you may want to introduce, to become the disruptor yourself.

The other type of disruption is a new-market foothold. This is when a disruptor creates a market where nothing existed before. Netflix is a good example of this type of disruption. Initially, Netflix was simply an alternative distribution method for movie rentals, sending DVDs through the mail. Netflix became a disruptor when it created an entirely new market by making it possible to use internet service to stream movies and television shows on demand. It succeeded in unseating the market leader because Blockbuster initially discounted Netflix as a competitive risk. Blockbuster knew its customers preferred to get videos the same day rather than wait for U.S. mail, but it failed to notice just how much its customers would love streaming video content online.

Because of the tendency to use the term disruption incorrectly, many companies that are referred to as disruptors are, in fact, not actually disruptive.

Uber has been used repeatedly as an example of disruption, but it doesn’t truly fit the definition. Instead, Uber is an example of a company that came to the market with a better product and became a superior competitor. It has certainly been disruptive to the taxi industry, largely because taxi companies have failed to do anything innovative in, well, forever.

Why Disruptors Matter

Now that it’s a bit clearer what disruption is really about, let’s talk about why it matters to you. Every business owner should regularly reflect on how a competitor might cause a meaningful disruption to their business. This is not so you can assume a defensive posture, but rather, so you can identify opportunities that are ripe for exploitation. How do you do this?

Question the ways in which your current business practices and products have been designed to accommodate the needs of your best customers. There’s nothing wrong with that; listening to customers is essential. But as you focus on your current customers you also institutionalize practices that make you less nimble. For example, many jewelry manufacturers have spent so many years customizing their operating software to support current customer requirements that it’s become nearly impossible to adopt newer technologies that allow them to automate business processes, introduce new services, or integrate their data with online systems.

Every business owner should regularly reflect on how a competitor might cause a meaningful disruption to their business. This is not so you can assume a defensive posture, but rather, so you can identify opportunities that are ripe for exploitation.

This inflexibility leaves you vulnerable to a low-end disruption. Brainstorm all the types of low-end disruption you might face and strategize how you might defend against them. Then, review the list through a different lens: Are there any low-end disruptions you may want to introduce, to become the disruptor yourself?

Let’s look at another example. Most established companies devote nearly 100 percent of product and service development resources to the existing styles, practices, and service requirements of their current customer base. If you’re not focusing any product development resources on emerging new markets—for example, online jewelry retailers—other manufacturers will fill those needs. Those unknown competitors can suddenly show up on your radar when they are already shifting market dynamics and stealing your market share. These types of disruptions should be considered as potential threats to your business. They should also be considered as a source of opportunity.

Any time new technologies are introduced, they create opportunities for disruption. The past 16 years have seen unprecedented technological innovation. Disruption of your business—and of the jewelry industry at large—should be treated as a likelihood rather than merely a possibility. If you want to future-proof your business, make disruption analysis a critical part of your strategic planning.

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