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Startups everywhere, from those in health care technology to those making dog food, are eager to describe themselves as “disruptive.” All the cools kids are disruptive so they must be too.
Authentic Disruption is actually pretty rare. And, true Disruption is usually displaced from direction competition. Often startups or incumbent businesses aren’t even aware they are being disruptive at first. So, what is Disruption, really?
True Disruption has two main aspects. First, the introduction of a version of an established product that is simpler or cheaper or both. Second, it has the capacity to make an incumbent’s value irrelevant through undermining.
Historical Examples
At the end of the nineteenth century a British Biologist named William Saville-Kent discovered how to control pearl production in oysters by inserting a small bead into the shell. By 1916 the process was perfected and patented by the famous pearl company Mikimoto. To say this process disrupted the natural pearl industry is a gross understatement. Prior to cultured pearls, a jewelry grade natural pearl was considered one of the most precious gems one could own. Conservative estimates suggest only 1 in 100,000 oysters have a gem-grade pearl in them. Because of this they were reserved for royalty. Legend has it the Cleopatra crushed a pearl into her wine and drank it just to show Marc Antony how wealthy she really was.
Natural jewelry-grade pearls today are still excruciatingly rare. About 99.99% of pearls today are cultured and are indistinguishable from natural “uncultured” pearls to the naked eye. Natural pearls had their value cut out from under them by the simpler, cheaper cultured pearl. What was once a sign of royalty is now a common sight on mere “regular” people thereby diffusing the status associated with wearing pearls. In this way, the culturing of pearls truly disrupted the natural pearl value and therefore the natural pearl industry.
For an even better example of disruptive irrelevancy let’s check out an ancient method of warfare.
One of the best ways to understand the concept of invalidating value is to look back at thirteenth century England and the siege upon Dover Castle. Dover was known for having one of the strongest fortifications and right on the coast of the English Channel. Multiple stone walls surrounded the keep making it impenetrable by enemy forces. Even head-on attacks from siege engines didn’t work. So, opposing forces turned to a technique called “undermining.” (Yes, this is where that word comes from). Workers dug tunnels underneath the castle walls and fortified them with timbers along the way. Once the tunnel was underneath the base of the wall they set fire to the timbers burning the supports away. After this happened, the weight of the castle walls proved to be too much for the now unsupported tunnel beneath, and the walls collapsed. Fortunately for the English, Dover had several levels of walls so, the didn’t end up succumbing to the enemy. But, undermining posed a huge risk to them.
Undermining is essential
An essential aspect to authentic Disruption is the activity of undermining. Usually, the incumbent never sees it coming. Take Netflix as an example. When Netflix began its business of mailing DVDs to consumers it didn’t seem to directly compete with video rental stores like Blockbuster and even seemed to support the DVD industry as a whole. However, once they built a subscriber base and technology caught up with their strategy, Netflix introduced streaming video.
The streaming video undermined the strength of the impenetrable wall of physical storage that was DVDs and BluRays. Previously, Blockbuster had the advantage over Netflix of immediate access since Netflix users needed to wait days to get a movie and Blockbuster was down the street. Now undermined, Blockbuster found their stronghold of the DVD crumbling as streaming video undermined its value. And BluRay “won” the format war in a pyrrhic victory finding itself in a marketplace where owning physical media was becoming less and less desirable.
Uber and Lyft aren’t disruptors to the taxi industry; they compete directly with them. They are positioned to disrupt the car manufacturing industry as it undermines the value of needing to purchase your own vehicle.
Electric cars compete directly with conventional engine cars. Their Disruption opportunity is with the car repair and maintenance industry. You don’t need an oil change if you don’t have a combustion engine.
Facebook was a direct competitor with Myspace. It was a disruptor to the film photography industry as it undermined the value of printing photos for the purpose of viewing and sharing. Kodak didn’t view Facebook as a competitor, but Facebook clearly undermined their value.
Final Advice for businesses
Both startups and established businesses can be disruptive, but merely agitating your competition with a superior product isn’t Disruption. To be a Disruptor you must introduce something innovative into the marketplace that has the potential to undermine the bedrock value of another business or industry. On the other side, don’t look at your direct competitors to find disruptive threats. Look at what could undermine your brand’s value, and what could make it irrelevant.
The concept of Disruption was expertly described in an article by Joseph Bower and Clayton Christensen in the Harvard Business Review in 1995 and revisited again in 2015. If you want to learn more about disruption these original sources are invaluable.