English | EN When are you going to be disrupted?
Jan 22, 2015
Disruption is happening all around and is triggered by the advances in Social, Mobile, Analytics, Cloud and smart ‘Things’ (SMACT). Customers are changing their behavior in response and companies are keen to find out how to (re)design their organization to survive and thrive in the face of this change.
What’s disruption?
The potential of new technologies is the main driver for disruption. Disruption itself can be described as a predictable pattern across industries in which fledgling companies use new technology to offer cheaper and inferior alternatives to products sold by established players. This is what we call the cycle of disruption:
- Incumbents treat innovation as a series of incremental improvements. They focus on improving the quality of their premium products to sustain their current business model.
- Disruptors introduce new products that, at first, do not seem like a threat. Their products are cheaper, with poor quality — to begin with.
- Over time, disruptors improve their product, usually by adapting a new technology. The flashpoint comes when their products become “good enough” for most customers. They are now poised to grow by taking market share from incumbents.
Disruption in 4 stages
Former Microsoft top executive Steven Sinofsky, who is currently Board Partner at the renowned venture capital company Andreessen Horowitz, shares his four-stage analysis of the working of disruptive innovation in terms of disruption, evolution, convergence and re-imagination for both low-end situations like Airbnb and high-end ones like Philips Lighting:
On the right-hand side is the established incumbent who moves through the steps from “deny” to “too late.” On the left-hand side we have the challenger who evolves from a niche solution to a benefit-for-all situation:
This mirrors the way in which Airbnb, Uber, Bitcoin, Tesla, Philips and Amazon, among others, are currently acting. These players target existing industry by offering a cheap and richer alternative that appeals to an ever-growing market. First of all they build a platform that everyone can join and utilize. For example, Airbnb provides one where people can offer their own home for temporary hire (bed and breakfast). A completely new (local) economy has now arisen around Airbnb, in which contract cleaners and restaurants also eagerly participate. Are you hiring an apartment here? If so, we can ensure that you can leave it nice and clean when you leave. And, when you’re here, these are the best places to eat at a reduced rate.
All such initiatives ensure that the acceptation of the platform gradually increases and that it can be quickly rolled out due to the network effect. In the wink of an eye, new companies with a turnover of billions suddenly arise, mowing down many of the existing industrial sectors. That’s when disruption happens.
Design to Disrupt
Find out more in the new VINT report that deals with everything that business leaders need to know about disruption and explores how to design to disrupt. Readers can expect the following insights:
- An overview of all relevant disruption theory and insights accompanied with speaking examples of accelerated innovation
- A set of design principles that is imperative to effectuate disruptive innovation
- Considerations for business leaders to bring innovation to the centre of their organizations
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