Questions and misconceptions about disruption theory are arising. What really matters is progress and to whom you are bringing your innovations.
I am facing multiple questions about what is or what is not disruptive in sites like Quora, and reading posts with misconceptions about disruptive innovation. I love to think about all of those questions and opinions. They help me to keep reflecting, and asking questions, to understand and keep learning. Besides, I admit that at some point, the original disruption theory of Dr. Clayton Christensen could be hard to apply or may not even be applicable.
My point with this controversy is that we may be losing the purpose of innovation, which in my view, is to bring progress to humans, helping us all to improve the way we perform our Jobs-to-be-Done while looking for economic efficiencies. If you still have not heard about JTBD, read this post by its father, Tony Ulwick.
Understanding the kind of innovation and positioning against competitors is a must reflection in order to make strategic decisions, but we must not lose the purpose of innovation: human progress.
Clarifications about disruption theory
That being said, I think some explanations on how the disruption theory of Clay Christensen works would help to better understand how disruption is different from sustaining innovations:
1. The product or service should meet two main conditions to fit with disruption
- It allows a new population of people that historically had no access to a similar product to perform the job, or it will enable people to pay lessfor a new product that the one they were using to complete a Job-to-be-Done. The theory identifies this last innovation as a low-end market disruption and the former as a new-market disruption.
- While comparing with the incumbent companies in the industry, it should not fit as a sustaining innovation in their business models. Otherwise, it would be easy to copy, adopt, and make it viable. Thus disruption process could not start.
2. Technology is not disruptive by itself
How technology is deployed in the marketplace compared to other existent products, services, or business models is what makes it disruptive.
Consider the smartphone to illustrate this assertion. If we think about the conditions defined to be a disruptive implementation, none of them are met while comparing the smartphone with the old cellphones. The iPhone, which in my opinion, was the first real smartphone, was more expensive than existent cellphones and was improving the performance when it was launched, focusing on high-end customers willing to pay more for an enhanced product.
However, the smartphone tech was a disruptive implementation of computers because it was cheaper to acquire, more convenient, and enabling a low-end market the use of the internet and hundreds of software tools at hand. Smartphones were, and are, good enough computers.
In the following chart, we can see how the worldwide market share of computers’ access to the internet, has been shrinking at the time smartphones/mobile’s access growing.
The same can be said if we compare the smartphones with the camera industry. Smartphone cameras were not better than digital cameras. At the same time, they were not cheaper if we compare them like a single device. However, if we aggregate the prices of a cell phone, a digital camera, and a computer, they were and are cheaper. The smartphone cameras have disrupted the digital camera market because they are good enough for the average user, more convenient, and “included” in a product price that can substitute multiple devices.
3. Disruptions are founded on the demand side
According to the original theory, disruptive strategies do not include the supply side in the disruption model. For example, one can think that Uber is disruptive because it enabled people without a job to use their cars and transport people as the taxis do, but that is the supply side, not the demand side. We may like it or not, but the theory does not cover this situation.
4. Disruption is a process that can or can not be completed in tens of years.
The process explains how the disruptive implementation of technology starts in the low-end of a market or creating new markets. After the low-end is captured, the companies usually move up in the market and compete in the mainstream with incumbents. While competing in the mainstream market, incumbents can face the threat of being buried or not, but in the meantime, they are being disrupted.
What matters is the progress purpose
To think about disruption, differentiation, and other known strategic terms and frameworks is a mandatory exercise to envision how our products can perform against what is in the market. However, the most crucial factor for innovation’s success is the purpose of improving the lives of the people doing the Jobs. This article with the JTBD circle framework could help to understand how to build an entire business around Jobs with the case of Tesla’s differentiation strategy.
Disruptive or not, we can expect our innovations to be successful if we are improving how humans fullfill their needs under the unique circumstances they are facing.
To illustrate this fact, I will use several examples of successful companies with different strategic approaches. Nonetheless, the intent of this article is not to explain in-depth every strategy. For more in-depth strategy explanations it is much better if you read the original piece of the father of this matrix Tony Ulwick.
Companies considerably improving the performance of their products or services, allowing underserved populations to do their Jobs better while charging significantly higher prices. Examples would be:
- Tesla Automotive
- The first version of Apple Mac Pro (next releases would be sustaining innovations of the product).
- The first version of Apple iPhone (2G) in the cellphone industry (subsequent versions would be sustaining innovations of the product).
- Uber Black
Products and services targeting all types of customers due to improving the way the job is performed while charging lower prices.
- Nexme: real estate platform connecting home sellers and home buyers with realtors in real time, like Uber. They are considerably improving the way that the three sides of the market (realtors, sellers, and buyers) perform their Jobs-to-be-Done while charging much less, improving market efficiency on the way.
- Netflix: considerably improving the Job of watching series/movies at home while charging a reasonable amount of money. Almost the same price than renting three movies per month at Blockbuster when it was still alive.
Companies with products or services targeting overserved (low-end) and non-consumer customers (new market), solving the job worst, whit just a good enough products, but charging considerably less price.
- GrowthSeeker: Surprised? We are building a virtual incubator with good-enough services, a unique service that is the custom content, and a low entry fee for startups/makers that don't have access to traditional incubators. Our strategy is to create a new market (thus competing against non-consumption) and little by little being able to provide services for the startups joining us as good as the traditional accelerators.
- Betterment: It is an automated online wealth management company. This article explains why their business model is disrupting the industry.
- AuraStrap: They are allowing new populations of users to access technology to analyze and track their body composition and hydration, considerably cheaper and conveniently in comparison with the existent solutions in the marketplace.
- Uber Pool: Worstly solving the job of commute (more time due to stop several times to pick-up and drop-off people) compared with other options in the marketplace but for a much lower price.
Companies with products os services targeting customers with restricted circumstances (because of laws, regulations, disabilities, or other factors), solving the Job-to-be-Done worst while charging more.
- Hudson group: Convenient stores situated after the airport security checkpoints.
Companies making slightly better products to charge the same or slightly less. Typically the updates of a product after the first version would be framed in this strategy:
- Newer versions of iPhone launched every year are sustaining innovations in comparison with the rest of smartphones and the iPhone itself.
- New versions of car models featuring updates over older versions. For example, Ford Mustang 2020 vs Mustang 2019.
As we can see, no matter what strategic approach businesses choose. There are very successful companies with different strategies. The key is not in the disruption, differentiation, or domination of the market. No matter what name we give to the innovation, what matters is how it is improving the existent products or services, either in features, convenience or costs, to help humans and companies with their lives and businesses. In bringing progress, the growth will come.