Disruptive innovation seems easy for start-ups and feels threatening and difficult for established businesses. But they can do it too. Here are five guiding principles to help you.
First, think of being disruptive as an outcome, not a strategy. It’s rarely an end in itself. No, not even for Uber. I’m sure their funding pitch talked about being disruptive but the essence of the idea was using mobile technology to match capacity with demand in real time. It prospered because it delivers a consumer benefit. Any minicab firm could have done it. Or even, as it turns out, a firm without minicabs. It’s a brilliant and simple idea which made incumbents cry foul, but it was not born out of any malice towards them. Likewise, Airbnb didn’t set out to disrupt the hotel industry. They didn’t even see themselves as being in that industry. In both cases, the founders felt a need, and created a solution. It grew. That should give hope to insight-seekers everywhere.
Second, practise thinking as if your current business doesn’t exist. Embrace the innovator’s dilemma, so-called because it assumes that disruptive innovation will be damaging to the core business. It doesn’t have to be, and you don’t know until you try. There’s a perfect case study in the world of running. As parkruns sprung up all over the country, running clubs felt threatened by the arrival of a new timed 5k run – offered weekly, and free – on their doorstep. Why would people pay to compete in runs if they could do it free? parkrun now has three million registered runners worldwide, but it’s not hurt established running clubs, it’s stimulated category growth. Running clubs have more members than ever.
Third, look for as many different ways as you can to segment your market, based on people and their needs, preferences, attitudes and habits. Forget about the product categories that exist. It’s natural to segment a market how a retailer organises the products on shelf, or how a website lists a range of services. That’s a useful round-up of today’s responses, not a definition of today’s needs. New segmentations can reveal latent demand that is invisible to the incumbents in the market. The music business is stacked with examples, from Sony Walkman’s music on the go to Spotify’s music you can listen to but don’t own. Market segmentation can also show us how old technologies can make a comeback, if they deliver a benefit. Both camera film and vinyl are no longer the easiest way to do the job, but they’ve both found a new reason to exist, for the aficionado.
Fourth, play with mobile and digital technology. Chances are your business would not be like it is today if these technologies had been around when it started. That’s not unique to current tech; new has always displaced old. The ultimate example is the US railroads, largely bankrupted by air travel. Theodore Levitt called it marketing myopia. Know what business you are in, from the customer’s point of view. The way your business does it now is only one way, based on yesterday’s technology.
Fifth, as always, keep looking for consumer problems to solve. Ask any independent optician, if you can find one, whether Specsavers was disruptive. Its founders were driven by a consumer need which pushed them to find a new business model. Proof you don’t have to be a tech-enabled upstart to be disruptive and successful.