Disruption: The Curious Case Of Uber
Disruption Theory was introduced by Professor Clayton Christensen in the Innovator’s Dilemma in 1997.
Disruption is a process whereby new entrants would overhaul incumbents, by initially serving the needs of segments that incumbents would find unattractive. Usually, new players would enter those segments with products that are not necessarily better than existing products ( because the latter would have overshot the needs of markets), but which low end of markets or non-markets would find appealing. Thus, by building their position in the “unattractive segments”, new entrants can build the expertise and experience needed to improve their offerings that would eventually appeal to incumbents’ markets. The advantage of this strategy is that incumbents would usually fail to react to the new entrants, thus giving the latter the time and space needed to grow and improve.
When a new entrant provides a new offering that is good enough to appeal to incumbents’ customers, the innovation would be a “sustaining innovation”. Problem is, sustaining innovations can sometimes disrupt industries. E.g. Uber.
The common denominator would be the failure of incumbents to react.
Historically, market entry at the low end of markets and in non-markets have been conditions for incumbents’ inertia to new entrants. Yet, as shown by Uber, such inertia can also exist when new entrants target incumbents’ customers. Central to the strategy of disruption would be the failure of incumbents to respond.
Thus, perhaps disruption as defined by Professor Christensen, should be seen more as a strategy about how new entrants would avoid competitive responses from incumbents among others, when introducing disruptive innovations. Or perhaps the scope of disruption should be widened to encompass all the strategies that would allow players to win when disrupting industries.
This begs the question: How would one define disruptive innovation?
A disruptive innovation would be one that fundamentally challenges and overtakes incumbents and/or redefines/creates industries.
Melina Padayachy is an Innovation Strategy Consultant at Next Curve Global, and the Author of The Innovator’s Method: Bringing New Ideas To Markets