By Jayson DeMers
We need to all agree on what a ‘disrupter’ is. The more accurately we can describe business concepts, the better we’ll understand our own markets and ideas.
For a while, “disruption” was a powerful word, first used to indicate a company that demonstrated innovation at such a high level, it created a new industry or truly reshaped an older one. Next, tech journalists, entrepreneurs and consumers started using the term to describe any business with a unique idea that had a chance to grow and succeed.
This isn’t to say that these companies weren’t valuable or worth exploring. It just means they weren’t good examples of what it truly means to be “disruptive” or to “change the game.”
Take, for example, the following companies, which have been popularly labeled or touted as disruptive, but aren’t truly as game-changing as we’ve come to believe:
Uber is known as the tech powerhouse that disrupted the transportation industry. Attracting $10.7 billion of funding, and with a valuation of $69 billion as of December 2017, it can accurately be described as an industry leader and an innovative, visionary one at that. So, why can’t we qualify it as a disruptor?
Clayton Christensen, the Harvard Business School professor who actually popularized the term “disruptive” in a 1997 book called The Innovator’s Dilemma, addressed this question in a recent Harvard Business Review article. He described true disruption as building a business by taking advantage of a low-end market that’s previously been ignored by dominant competitors chasing profits. Alternately, Christensen wrote, true disruption could entail creating an entirely new market — generating customers where there weren’t any before.
Uber doesn’t fall into either category of disruption. It emerged as an alternative solution for taxi services, where customers already existed. Though generally less expensive than a taxi ride, the “Uber” solution is still comparable enough in price that it didn’t open up a new market, and therefore didn’t “change the game” from the ground up.
Another hallmark of disruptors, according to Christensen, is a company that originates as a low-quality alternative, with a gradual transition to a more competitive, higher-quality offer.
Uber came into the field with a high-quality alternative — a better product — which made it a clearly superior competitor. So this third “disruptor” definition by Christensen did apply, either.
Technology has provided the groundwork for disruption; its advancements make things cheaper and more readily available, and they simultaneously introduce new products and services that haven’t been explored before. That’s why, when most people think about true game-changing technologies, they think of Google — the world’s favorite search engine.
But Google isn’t and never was a disruptive company. Google wasn’t the first company to invent and capitalize on the search engine model; back in 1990, a search engine called Archie started taking user queries and matching them to websites. By 1993, alternatives were already making use of bots and search crawlers to build indexes of the web.
By the time Google got started, there were already dozens of mainstream options for search, including Yahoo! and Ask Jeeves. Google didn’t create a new market; it just capitalized on an existing one by building a better product.
Beyond that, Google isn’t truly disrupting in other areas, either. Email was mainstream by the time Google developed its popular and innovative Gmail product; and even its futuristic ventures, like autonomous vehicles, are built on the notion of improved solutions for existing customer bases.
Tesla Motors’ approach to business relies on constant, and at times ruthless innovation. Since its launch, it’s been become the most valuable automaker in the United States. It’s unveiled new and affordable models of electric vehicles, and has helped introduce the concept of semi-autonomous driving to mainstream consumers.
In fact, the company is innovating at an astounding pace, is differentiating itself from its competitors and is enjoying a significant level of success as a result — but it still isn’t disruptive.
Tesla isn’t disruptive because its vehicles have been serving a market that already exists. Electric and hybrid cars weren’t new to Tesla; instead, Tesla merely improved on an existing design. Accordingly, existing car purchasers are merely upgrading to Tesla, rather than emerging from a period as non-customers.
Plus, consider the fact that even Tesla’s least expensive model runs for about $70,000, putting it well outside a price range we might consider for a disruptor that’s trying to target underserved portions of the market.
So, think about this: Before you use the term “disruptive” to label a business, carefully consider what that business is really doing. If it’s taking an existing concept and making it better, it has a high chance of access to “disrupter” status. But it isn’t creating a new market. If it’s merely capitalizing on existing customers and giving them more of what they want, it will likely trounce the competition, to be sure. But it isn’t creating customers where there weren’t any before.
In sum, these thoughts on the D-word aren’t an empty exercise: The more accurately we can describe and learn from business concepts like these, the better we’ll understand our own markets and our own ideas.
Feature Image credit: Chris Ratcliffe | Getty Images