Disruptive Innovation, I had it Wrong

Just about a month ago I asked if you thought you were ready for the next big world changing innovation. When people talk about life altering innovations they often reference what Clayton Christensen calls disruptive innovation. I thought I knew what this meant, but it turns out I didn't have it completely right.

disruptive innovation

Christensen first introduced the idea of disruptive innovation in the pages of Harvard Business Review in 1995 and then in December, 2015 discussed how the core concepts have been misunderstood and incorrectly applied.

To better illustrate the concept Christensen uses the example of Uber and its disruption to the taxi industry, but what he argues is that Uber is not actually a disruptive innovation.  Although Uber can be found in over 60 countries and hundreds of cities and has definitely shaken up the taxi industry it isn't truly disruptive if you apply the core concepts correctly.  He specifically sites the following two reasons:

  1. Disruptive innovations originate in low-end or new-markets.
  2. Disruptive innovations don't catch on with mainstream customers until quality catches up to their standards.

When you look at Uber from this perspective although market changing it isn't truly disruptive by Christensen's standards.  Most Uber users were already using taxis and other forms of public transportation and they had higher quality at a competitive price from the beginning.

He states that identifying true disruptive innovations can be tricky, but there are 4 important points that often get overlooked:

  1. Disruption is a Process and often takes time.  This often results in the current market holders to frequently overlook the disrupters. Think Blockbuster and Netflix.
  2. Disrupters often build business models that are very different from those of the current market holders. Here he asks that we look at the business model of a general practitioner's medical office vs. the new model behind the convenient care clinics popping up in grocery stores and strip malls across America.
  3. Some disruptive innovations succeed; some don't.  Success is not a marker of disruption.
  4. The mantra "disrupt or be disrupted" can misguide us.  Current market holders shouldn't ignore disrupters, but they should also, not make rash decisions.

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