Disruption is a widely used buzzword that some businesses — technology-based companies in particular — fear. In those cases, you may see disrupting defined or described as destrictive or unwelcome change.
A disruptive innovation can replace an established business model and thus make entire markets disappear. But those who are adaptable and always stay informed about their industry’s innovations need not be afraid of disruption.
Disruptions have already occurred frequently in the history of technology. We will outline why you should more often see disrupting defined as being beneficial — and how you can prepare for a possible disruptive innovation.
Disrupting defined: simple definition
“To disrupt” means “interrupt” — and in business, also to “destroy”. Disruptive innovations are often described as “destructive” because they replace old business models or technologies. The invention of the smartphone largely replaced the MP3 player, digital cameras, maps and newspapers. From this example, you can already see that disruptions do not necessarily completely destroy a market. Sometimes they only turn him around from scratch. New business models are developing.
The term disruption was coine by the American economist Clayton M. Christensen in his book The Innovator’s Dilemma in 1997. According to Christensen, disruptive innovations usually arise in new markets or enter an established market at the bottom. Often they are not particularly successful at the beginning. Finally, new technologies must first prove themselves in practice. Most of them still need some improvements before they are superior to their predecessors. And last but not least, users have to accept the new for themselves.
Why are these technologies a dilemma? And for whom?
A feature of disruptive technologies is that existing customers are sceptical about the new technologies and first have to find new customers who appreciate the technologies. In the beginning, digital photography was not an option for professional photographers, because they attached great importance to image quality and not to the rapid reuse of the photo, for example, to put it on websites or today to post it on Instagram. This is exactly where the dilemma arises, an unresolving conflict for established companies.
The existing customers of the established companies do not appreciate the disruptive technology and the new, possible customer segments are not yet mature enough. That is, the more focused an established company is on its current customers, the more difficult it is for these companies to invest in technologies that their current customers do not appreciate at all.
Later, however, the disruptive technology establishes itself and supplants the old one. Today, after initial scepticism, almost everyone uses a smartphone instead of a button cell phone without Internet access. The historian Jill Lepore criticized Christensen’s theory in 2014 in an article in the New Yorker as scaremongering. With many disruptive business models, success declines after a short time. The fear of disruption fuels especially those who earn money with anti-disruption seminars.
Disrupting defined: Difference between normal and disruptive innovation
Innovations are ideas, inventions or transfers from other industries that are intended to make a product, a company or an entire industry better. With normal innovation, this only means the further development of already established ideas and inventions. However, disruptive innovation has the potential to partially or completely replace established products, companies and markets. Generally speaking, disruptive innovations are no better or worse than anyone else. But they are accompanied by major restructuring for markets, companies and individual employees.
Disruptive technologies
The term disruption is particularly common in connection with tech companies and technological innovations. Technical development has never been faster than in the last 30 years. From records and cassettes to CDs and MP3 players to smartphones and music streaming, from the invention of the Internet to the networking of household appliances – many technologies have become relics from the past within a few years. It is therefore particularly important for technology markets to deal with disruption. In part, the term disruptive technology is also used analogous to disruptive innovation.
Disrupting defined: Examples of disruptive innovations
There are numerous examples of disrupting defined by technological innovations. Digital disruption plays a major role in this, but not the only one.
- The invention of the automobile replaced the horse-drawn carriage.
- CRT televisions have been replaced by flat screens thanks to semiconductor electronics.
- DVDs replaced video cassettes and are now slowly being replaced by video streaming.
- Analog photography became digital photography.
- Voice over IP, i.e. telephony over the Internet, replaces classic telephony, which is billed over minutes on the fixed network or mobile phone.
- Smartphones take the place of landline phone, key phones and PC.
- Share riding is edging taxis out of the personal transportation business.
Disruptive technologies go hand in hand with business model innovations
Christensen speaks of ‘technologies’. Here it is important to distinguish that the means more than the physical or digital technology: he means the entire process of creating entrepreneurial value from a technology. Today, there is also talk of disruptive business models that make existing business models superfluous. With these innovations, only the customer’s need remains the same, but everything else changes.
Patrick Stähler pointed out in 2001 that technologies directly do not create value, but technologies enable new business models, but the business model creates value for customers and owners. Uber uses new technologies to challenge the classic taxi industry with an innovative business model. In other words, disruptive technologies go hand in hand with business model innovations.
Is every disruptive innovation successful?
The idea is only a first step on the way to disruptive innovation. Rather, it is important to develop a sustainable business model from the idea. This requires a sophisticated concept that can exist in practice. The implementation is followed in most cases by a phase of optimization. Few innovative startups will be successful immediately. In the end, an innovation only becomes disruptive when the majority of users accept it and prefer it to the conventional variant.
So not every disruptive technology is crowned with success. And even if it is, it may be that they and the established technology coexist. This is the case, for example, with books and e-books. If no one were interested in “real” books anymore, large online mail order companies would not open physical bookstores.
It is often not decisive for many years whether an innovation is disruptive. AirBnB developed into the world’s largest room provider without its own rooms, but does not seem to replace hotels, but rather to establish a new form of travel for a specific target group.
Whether streaming services such as Netflix supplant conventional television or only supplement it remains open. Uber manages to almost supplant traditional taxi services in some countries, but not in most countries. These examples show that high distribution and stock market valuations are also accompanied by disruption fantasies, but these are above all tangible business model innovations.
Disrupting defined: Do I have to be afraid of disruption?
Maybe you are now wondering if your business activity could soon be replaced by a new technology. However, fear of disruptive innovation is not a good driver for your company. Only some industries are threatened with displacement by robots and other machines. In many cases, it is possible to respond to disruption with a restructuring. Whoever is up to date, can adapt more easily to innovations.
Often the old technology is not lost, but only changes its meaning. For example, a handwritten letter is something special today, while it used to be part of everyday life. There are, for example, robots that can write texts or care for old people. However, they lack the emotional, human component. And human users will always be dependent on them.
What does disruptive innovation mean for my industry?
Disruption due to digitization or technical innovations is the most common. This mainly affects mechanical activities that could be taken over by machines or robots. They are most likely to be completely replaced. Creative companies and those where social or emotional factors are important can rather affect disruptive technologies less. Depending on which industry you work in, you can adapt to the new technology and use it for you.
Targeted use of disruptive business models
As a founder, you can bring a disruptive innovation to market yourself. The big advantage of innovations is that they make work and life easier. Many new technologies provide more comfort, more time or more safety. A disruptive business idea allows you to conquer, replace or re-enter a market.
More and more company founders are choosing to create an innovative business model. The idea behind it is to gain a competitive advantage as quickly as possible. Companies characterized by business model innovation often offer novel products and services with the aim of creating a new demand and creating a unique customer experience through innovation. The focus of this article is on the business model innovation definition. In addition, examples and methods of establishing an innovative business model will be presented shortly.
Business model innovation: definition
A business model innovation goes far beyond product and process innovation in scope. It includes an innovation in the entire value-added architecture of a company. The primary goal is to deliver real added value for customers and subsequently achieve valuable competitive advantages. It is also a matter of opening up new market segments or creating completely new markets for own products and services with the help of an innovative business model. Whether a business innovation will be successful or not depends on several factors. The current market situation, demand for supply and the ability to inspire customers are some of them.
Example of a business model innovation
The corporate world is experiencing a change, which is partly due to the ongoing digitalization. In fact, new technologies set a milestone for innovative business models that offer revolutionary solutions and allow many industries to be viewed from a new perspective. To return to the example of Uber, passenger transport by private individuals is a well-known business model innovation example.
