You probably use the verb disrupt to describe something surprising or innovative--whether it's your business model, your product itself, or even a feature of one of your products.
And you're probably using the word incorrectly. It's not entirely your fault. Ever since Harvard Business School professor Clayton Christensen first proposed his theory of disruptive innovation in 1995, the term has been widely co-opted and misappropriated by the business community. The result is what often happens when words get misused by the masses: The word assumes the misused meaning. Aggravate used to mean "worsen." Now it also means "annoy."
Likewise, disrupt, in entrepreneurial parlance, now commonly means "innovate in a new or surprising way." But this week, in the Harvard Business Review, Christensen himself added clarity to the term, along with co-authors Michael E. Raynor (a director at Deloitte Consulting) and Rory MacDonald (a professor at HBS). Too many people, they write, "use the term loosely to invoke the concept of innovation in support of whatever it is they wish to do."
Here are five takeaways from their clarification:
1. "Disruptive innovation" does not necessarily apply to every industry in which newcomers make the incumbents stumble.
In other words, just because your startup has won customers with a high-tech breakthrough, that doesn't mean--by the book--that you've "disrupted" the old guard.
2. "Disruption" specifically refers to what happens when the incumbents are so focused on pleasing their most profitable customers that they neglect or misjudge the needs of their other segments.
If your startup comes along and wins over those overlooked segments--with better pricing or functionality--then your innovation is potentially disruptive. But the reason is not necessarily because what you're doing is so novel or high tech. It's because the titans--hyperfocused on the high-profit segments--have not adequately responded to your entry.
3. The disruption happens when the newcomer--having already conquered the customers the incumbents are neglecting--begins to conquer the high-margin customers, too.
The key for the newcomers is delivering the performance that incumbents' customers require, while preserving the advantages that drove their early success.
4. Strictly speaking, Uber is not disrupting the taxi business.
For two reasons. The first is that, according to Christensen's theory, disruptive innovations originate in low-end or new-market footholds. He and his co-authors assert that Uber did not originate in either:
It is difficult to claim that the company found a low-end opportunity: That would have meant taxi service providers had overshot the needs of a material number of customers by making cabs too plentiful, too easy to use, and too clean. Neither did Uber primarily target nonconsumers--people who found the existing alternatives so expensive or inconvenient that they took public transit or drove themselves instead: Uber was launched in San Francisco (a well-served taxi market), and Uber's customers were generally people already in the habit of hiring rides.
None of that takes away from what Uber has accomplished. Nor does it signal, from Christensen and his co-authors, a disrespect for Uber's impact. "Uber has quite arguably been increasing total demand--that's what happens when you develop a better, less-expensive solution to a widespread customer need," they write.
"But disrupters start by appealing to low-end or unserved consumers and then migrate to the mainstream market," they continue. "Uber has gone in exactly the opposite direction: building a position in the mainstream market first and subsequently appealing to historically overlooked segments."
5. Disruption is a process, not a single moment or an isolated product introduction.
The process can take decades. Nor does it necessarily result in a wipeout of the incumbent. "More than 50 years after the first discount department store was opened, mainstream retail companies still operate their traditional department-store formats," note the authors.
Netflix is one example of a gradual disrupter who did conquer the incumbent (Blockbuster). "If Netflix (like Uber) had begun by launching a service targeted at a larger competitor's core market, Blockbuster's response would very likely have been a vigorous and perhaps successful counterattack," they write. Instead, Netflix began at the fringe. "The service appealed to only a few customer groups--movie buffs who didn't care about new releases, early adopters of DVD players, and online shoppers," they add.
Toward the end of the essay, the authors address why the proper definition of disruption still matters--especially when it comes to Uber. "The company has certainly thrown the taxi industry into disarray: Isn't that 'disruptive' enough?" they ask.
Their answer is a firm no. And the reason is for your own benefit. Of all the small competitors poaching your low-end customers, how do you know which ones to ignore and which ones to pay attention to? Likewise, if you yourself are the newcomer, how can you sneak up on a giant (as Netflix did), without luring too much of its attention?
Twenty years after its introduction, Christensen's theory of disruptive innovation can still help you answer those questions.
NOTE CREDIT: http://www.inc.com/ilan-mochari/clayton-christensen-disruptive-innovation-cheatsheet.html