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The complete guide to disruption

Everything you need to know about business disruption

Are you engaging in business disruption? When talking about movers and shakers in different industries, many different disruption examples come up. Disruption has become one of the most overused words in the business world – so overused that it’s difficult to pinpoint the real meaning behind all the buzz. 

The concept of disruptive innovation might have one meaning in your industry and an entirely different meaning in another. How can you give disruption meaning for your brand without a clear understanding of what it is? Do you even need to care about disruptive innovation? If your business isn’t disrupting the status quo, is that a problem? And does all success require disruption

What is disruptive innovation?

Let’s start with a dictionary definition of disruption:

dis·rup·tion

/disˈrəpSH(ə)n/

noun: disruption; plural noun: disruptions

1. A disturbance or problem that interrupts an event, activity or process.

This meaning of disruption is synonymous with “interruption,” which has a largely negative connotation. But for business use, the term “disruption” really took off with Clayton Christensen’s 1997 book The Innovator’s Dilemma, where he introduced the idea of “disruptive innovation.” He used this phrase as a way to think about successful companies not just meeting customers’ current needs, but anticipating their unstated or future needs. His theory worked to explain how small companies with minimal resources were able to enter a market and displace the established system. In Christensen’s writing, business disruption was a good thing. 

Business disruption was a powerful concept when Christensen first published it, but like most buzzwords, the term quickly took on a life of its own. Suddenly everyone in the workforce was “disruptive” or “innovative.” Christensen was so concerned with the transformation the term had taken on that he published a 2015 update in the Harvard Business Review on what the term “business disruption” really encompasses.

Yet this trendy phrase continues to catch on. As Tony Robbins has pointed out, the words we attach to our experience become our experience. Words have a biochemical effect on the body. The minute you use a word like “devastated” you’re going to produce a very different biochemical effect than if you say, “I’m a bit disappointed.”

The same goes for when we give disruption meaning with phrases like “disruptive innovation.” When overused, they lose their meaning and limit how we can think of what makes a successful business. This leads to a homogenization of how we visualize success and, ironically, creates limiting beliefs about what kind of businesses will change the nature of the game.

what is disruptive innovation

Innovation versus disruptive innovation

Since the boom of Silicon Valley and the tech industry, disruption has started to seem like nothing more than someone having a great idea. But true disruption goes further than innovation: Innovation can occur within an existing industry, while disruptive innovation actually creates a whole new industry. Disruptive innovation is true disruption.

The original theory actually points to a specific process through which a business disrupts others, taking their market share by targeting overlooked customer segments. The disruptive business then moves into the mainstream, gaining more and more market share while also staying agile and able to outmaneuver the competition.

Christensen says that business disruption is likely to start by either attracting the less-demanding customers or creating a market where none existed before. “When mainstream customers start adopting the entrants’ offerings in volume,” he explains, “disruption has occurred.”

An authentic disruption definition must work in any industry, for any business model and for any brand. Since the term has different meanings in the business world, disruption is an often-nebulous concept. Let’s consider some criteria for business disruption

  • They aren’t always flashy. One problem with identifying disruptors is that often they need lots of time to make a real impact in their respective fields. Sometimes it can take years for the true effects of disruption to present itself in the market. Additionally, a disruptor’s business model can look completely different than what’s already there, so it can be hard to identify disruptive innovation in early stages. This is especially true of companies that anticipate social shifts that few others in the industry are aware of.
  • They add real value. Most true disruptors aren’t setting out just to be disruptors. Like any other business owner, they want to provide a product or service that adds real value for their customers. The best disruptors are those who are innovating constantly because they find meaning in their mission. Their business is revealed as disruptive only over time as they make their mark, often permanently changing an entire industry. They never really focus on the question “What is disruptive innovation?” because they don’t care. Their priority is making a difference.
  • They do things differently. It’s easy for other businesses in a market to write off potential disruption. A disruptive business doesn’t appear to be a threat at first because their ideas are so out there that others expect them to fail. Or it may follow an uncommon business model, like Apple’s iPhone, which directly connected developers with users in “apps” – and changed the communications industry forever.

business disruption

Benefits of disruption

Is disruption good for your business? The answer to this question doesn’t depend on the market or on outside forces. It depends on the psychology of the business’ leaders. If leadership is able to recognize an opportunity for disruption to quickly respond to another disruptive business, the business will be rewarded.

  • Improved agility. The tech companies that started the disruption trend are well-known for being flexible, agile and innovative. They have flat business structures with less hierarchy, making them better prepared for the future. Companies that embrace the ethos of disruption will see similar benefits.
  • More growth opportunities. When you’re on the lookout for disruption, you’ll likely spot growth opportunities as well. Even if they don’t qualify as true disruptive innovation, these new sales channels, markets or products can help you scale your company and drive more revenue.
  • Higher customer fulfillment. The goal of any business must be to create raving fan customers. Listening to what your customers truly want has two benefits: You’ll discover opportunities for disruption and create happier customers.

disruption examples

Disruption examples

To better understand disruption, think of Netflix. When Netflix started, Blockbuster thought the service seemed insignificant. Why would anyone wait for DVDs to arrive in the mail when they could pick them up at the store? Blockbuster didn’t anticipate where the future of movie watching was headed, or that streaming would become the next phase of home entertainment that would ultimately lead to its downfall. Instead of considering the next generation and their preferences, Blockbuster continued to rely on their DVD-renting customers.

When Netflix came to the rental giant to sell their business, Blockbuster declined. If Netflix had started out targeting Blockbuster’s core market, it’s likely Blockbuster would have launched “a vigorous and perhaps successful counterattack,” explains Christensen. But because of the time that disruption requires, Blockbuster didn’t realize it was threatened until Netflix tapped into streaming services, unlocking the brand’s immense profitability. By then it was too late. Today, Netflix is worth billions of dollars and Blockbuster is bankrupt.

How about an example of a company most people think is disruptive, like Uber? Chances are you’ve read or heard the words “disruption” and “Uber” used in the same sentence. Yet according to Christensen’s theory, while they are innovative, Uber doesn’t actually fit the true meaning of disruptive innovation. Why? Because the service provides a direct challenge to taxis – a preexisting market.

Did Uber shift the transportation industry? Yes. But it didn’t truly disrupt it.

Think of it this way: If an idea existed before, it’s likely the business isn’t disruptive. But some innovations like radio or television – changed the entire entertainment industry and embody disruptive innovation.

DISRUPTION EXAMPLES

How to leverage business disruption

Creating a disruption strategy requires an actionable plan for getting from where you are now to where you want to be. It puts your desire for disruption into motion. Having a strategy allows you to anticipate disruptive forces coming into your industry so you can plan for – and benefit – from them.

1. Determine your X factor

How can a brand deploy business disruption? Is there a secret to disruptive innovation

The phrase “disrupt or be disrupted” is a misnomer. In many ways, debating whether or not Tesla Motors or Apple fits the disruptive model or not misses the point. What matters more is turning your customers into lifelong devotees, not making this or that product disruptive. 

It’s about finding new and better ways to engage and retain your customers, such as with Artificial Intelligence (AI). Depending on how it’s used, AI might not qualify as business disruption because it’s been heavily utilized for decades. But whether it’s disruptive or not, it can provide an easy and effective way to connect with your customers and can make your business more successful. When you think of it that way, who cares if it’s business disruption? It’s success, and that is what most business owners strive for. 

When you clearly identify your X factor, you’ll be poised to experience incredible growth as you find ways to stand out in a crowded world. By anticipating the changing needs of your customers, innovation and disruption will occur naturally. When you take the focus off of disruption and put it on solving problems for your customers, you will always head in the right direction.

2. Practice CANI

Another way to think about success via innovation comes from Tony’s Business Mastery event. As Tony says, Innovation, what is innovation? It’s not tech. Innovation is any way you find a way to do more for a client than anybody else does. In fact, if there’s one goal I have for you, it’s to fall in love with your client and not with your product or service, because your product or service is going to have to change.”

Unless you’re constantly innovating, and innovating in a way that customers care about, you’re going to be in the dust. That’s CANI – constant and never-ending improvement.

Put another way, are you a multiplier or a diminisher? As Jay Abraham teaches us, a multiplier can take even an average business idea and elevate it beyond its initial potential. Conversely, a diminisher could take a bulletproof business that’s in the black and tank it in a matter of months. The key is attitude. 

If you view yourself as an entrepreneur and back that up with action in your business, you will seek out innovation and improvement at every turn. You will not settle for the status quo when you know that your business can do more. Conversely, a proprietor is happy to put in hours, make a modest profit and never disrupt the status quo. In short, a proprietor maintains the status quo. Entrepreneurs have a growth mindset and are born to become examples of disruption.

3. Learn how to spot business disruption

What causes business disruption? Most often, markets that are ripe for disruption are those that include a lot of large, inflexible businesses. These companies have been around for years and feel that they have cornered the market – they feel safe. This is a mistake and leaves them vulnerable to disruption from startups that provide more value than them.

This is why disruption requires keeping in touch with changes in your industry so you can stay one step ahead. This might include technological advances, changes in the market or shifts in customer preferences as your target audience grows older. You want to disrupt instead of being disrupted, so keep a pulse on your competition and stay agile and open to new opportunities.

4. Practice self-disruption

“Disruptive innovation is a high stakes game, with high risk and potentially high rewards,” explains Alison Coleman in Forbes. “It’s also very difficult to spot the winning disruptive opportunities, especially when disruptive ideas require other players in the ecosystem to acknowledge and embrace the change.”

Don’t be afraid to disrupt your own brand.

Self-disruption – constantly adapting your product to remain relevant – can only help you. Forbes reports on Apple’s use of disruption as a long-term growth strategy. The company’s iPod revenue dropped by $345 million because of Apple’s own business disruption: the iPhone, which generated $18 billion in revenue.

5. Optimize from within

Don’t get tricked into thinking that because your business isn’t on the scale of Netflix, there are no lessons to be learned. Businesses of any size can engage in disruption. But to do so, you must work from within your own company.

Answer this question: Do you want your business to grow? Ninety-nine business owners out of 100 will answer yes. But before growing your business, you must optimize your company from within.

This is where we can turn to business guru Jay Abraham. He argues that many business owners want growth, but their focus is trained outside of their business. This is a mistake. To successfully prepare your business for real growth, you need to encourage disruption from within by analyzing your existing structure. Instead of engaging in disruptive innovation blindly, Jay Abraham advocates for careful examination of your business from the inside out.

6. Scale mindfully

Once you have a handle on what business you’re really in, you can begin the process known as mindful scaling. Start with your sales force. Before you invest in a new software system to automate your team’s numbers, look first at their processes.

How can you make their messaging more effective? How can you open client relationships in new areas? Don’t stop at analyzing your sales team. Take a look at your marketing strategy as well. If your numbers are flat, it’s time to experiment with new avenues of messaging. While you’re at it, take a look at how you serve your existing customers. Are you meeting their needs? Are there ways you can serve them faster and make their process easier and more streamlined?

Remember, a hallmark of disruptive innovation is the ability to play the long game as well as maintain your initial advantages even as you take more market share. This requires a comprehensive business map, a powerful vision for your organization and excellent goal-setting and decision-making skills. All of these things will help you scale mindfully and become a successful example of disruption rather than a forgotten failure.

7. Don’t force disruption

No one can deny the popularity of business disruption and what the term implies. Who wouldn’t want to change the landscape of the marketplace? Most entrepreneurs are naturally innovative, and most innovators have dreams of changing the world. This is one of the reasons why disruption is so appealing.

Because disruptive innovation has become synonymous with progress – and everyone likes progress – many companies attempt to style themselves as “disruptive” right from the get-go. But here’s the secret: not every successful business or product needs to disrupt. 

Take virtual reality. New innovations have led to the creation of a new market poised to change how we experience everything from sports to education. Skeptical? Listen to Brad Allen, chairman of NextVR, describe his vision of what’s coming and judge for yourself. With innovations like NextVR, consumers can touch, feel and experience events like never before – all from the comfort of their own homes.

What’s more important: focusing on business disruption, or taking an integrated approach? It could be the case that, to make your business talkably different from the competition, you don’t necessarily need disruption

To truly create sustainable growth and a thriving company, get to know your business identity. When you understand what drives your company, you’re prepared to take it to the next level.

Team Tony

Team Tony cultivates, curates and shares Tony Robbins’ stories and core principles, to help others achieve an extraordinary life.

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