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In case you’re yet to come across this concept, disruptive innovation refers to the process whereby a new company, product or service, storms into the market and outperforms existing companies, products, or services, thereby, displacing current brands, markets leaders, or alliances. It is a kind of innovation that beats competitors hands down, with a transforming effect on the market. The phenomenon of this concept was defined by Clayton M. Christensen in 1995. The concept is referred to as Disruptive, because it bypasses the norm of enhancing or reforming existing products or services, but leverages digital technology to create an entirely new process, at an affordable price for a larger market. Most disruptive innovations shake off competitors from the market. Disruptive Innovation is usually cost-effective and accessible, targets a small market before it breaks out into a wider market, has a lower gross margin than competitors, and usually climbs the ladder slowly and unnoticed by competitors.
How Does This Work?
Disruptive Innovation begins when a company tries to find out gaps or loopholes in the industry that have been overlooked, or a target market that might have been neglected. Having made these observations/findings, they begin to create a new product or service targeted at these neglected populations, at an affordable price. Disruptive Innovations penetrate an industry through a less profitable space, and gradually break out into the wider market, fully equipped with better products, and services and with a knowledge of improving customer satisfaction and experience. Most established companies in the industry make the mistake of overlooking these new companies, products, or services till it sends them packing from the market.Sign up to the Connect Nigeria daily newsletter
Below are some of the amazing companies that have transformed their industries, and with these examples, you could learn how to better position your business.
- Online Encyclopedia: It took over a decade for online encyclopedias like Encyclopedia Britannica to displace traditional encyclopedias, which were considered the gold standard for centuries.
- Personal Computers: This disrupted the mini-computer which was held in high esteem centuries ago. First, it was the mainframe computers, then mini-computers, followed by desktop computers such as laptops, which broke out and garnered a great deal of customer base.
- Smartphones: Just as laptops displaced the mini-computers, smartphones have taken the lead in terms of being the primary means for consumers to access information online. As against people’s beliefs, the iPhone is not a disruptive innovation, in that it didn’t displace other smartphones, instead, it was an upgrade to existing models, and created a different path in the online world.
- Digital Cameras: The digital camera is a big disruption to the entire photography industry. Despite the rejection faced by digital camera inventor, Steve Sasson, a Kodak engineer in the ’70s, the digital camera has spread like wide fire, displacing the once considered almighty photographers. This technology was able to explode, because cell phone cameras were very handy, thus, making it easy for people to access it. Companies, therefore, capitalized on this to improve the camera quality of cell phones, and today, iPhone cameras and other phone cameras are capable of creating magic.
- Ford Motors: Ford motors disrupted the market, by finding out a neglected position of the market and capitalizing on them. With Ford motors, it became easier for the average classed person to own a car that was previously targeted for just the affluent.
- FedEx: This is another disruptive innovation company that transformed its industry by delivering on express mail. With a mission to tackle the inefficiencies in shipping practices, Fred Smith birthed the concept of express mail.
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