By Ed McLaughlin and Wyn Lydecker
Disruption is a dream come true for entrepreneurs who catch the market by surprise and interrupt the status quo. Forbes staff writer Caroline Howard says, “Disruption takes a left turn by literally uprooting and changing how we think, behave, do business, learn and go about our day-to-day.” Let’s explore two ways your startup can achieve this competitive edge: Sustaining Innovation and Disruptive Innovation.
Sustaining Innovation
A startup can transform an existing market with sustaining innovation. This kind of disruption does not create a new market, but it does advance an existing market, and it lures customers away from the competition with the promise of something better. The success of my company, USI, was rooted in disruption caused by sustaining innovation because I offered the clear-cut advantages of greater efficiency and value to my customers. I tell the story of our disruptive entrance into the market in my book, The Purpose is Profit. Disruption caused by sustaining innovation stirs up the market because products and services compete with each other’s sustaining improvements. The automobile industry is an example of sustaining innovation. Car manufacturers engage in ongoing competition to stay one step ahead of each other in the existing car market.
Disruptive Innovation
By contrast, disruptive innovation doesn’t just disrupt the status quo, it creates entirely new markets and can drive others into antiquity. When Ford mass-produced the affordable Model T in 1908, the transportation market experienced disruptive innovation because the automobile created an entirely new mode of transportation and displaced horse-drawn vehicles.
Disruptive innovation can cause changes outside of a single market. It can create a domino effect and influence or completely wipe out other markets. In her New Yorker article, The Disruption Machine, Jill Lepore clarifies how one disruptive innovation crossed over to other industries. “Things you own or use that are now considered to be the product of disruptive innovation include your smartphone and many of its apps, which have disrupted businesses from travel agencies and record stores to mapmaking and taxi dispatch.”
Forbes contributing editor Steven Denning addresses this cross-over of disruption from one market to another in his Forbes article, “Business’s Worst Nightmare: Big Bang Disruption.” Most of Denning’s comments revolve around Larry Downes’ and Paul Nunes’ 2014 book, Big Bang Disruption: Strategy in the Age of Devastating Innovation. Denning describes big bang disruption as “large-scale fast-paced innovation that can disrupt stable businesses very rapidly.” Dennings spotlights examples of big bang disruption: address books, video cameras, pagers, wristwatches, maps, books, travel games, flashlights, home telephones, dictation recorders, cash registers, Walkmen, Day-Timers, alarm clocks, answering machines, yellow pages, transistor radios, airline ticket counters, newspapers and magazines, directory assistance, travel and insurance agents, restaurant guides and pocket calculators.
The list goes on, and we can expect it to grow.
In the fall of 2014, The University of Southern California enrolled its first students in their new academy, which bears the name of the two music industry leaders who made it possible with a $70 million investment: “Jimmy Iovine and Andre Young Academy for Arts, Technology, and Business Innovation.” USC describes the new academy’s goal. “The focus is on invention and conceptual thinking, drawing on the talents and influences of leaders from across industries to empower the next generation of disruptive inventors and professional thought leaders across a multitude of global industries.” (http://iovine-young.usc.edu) Students will graduate with A Degree in Disruption.
I Did It. You Can Too!
I was in the corporate real estate industry when I saw my chance for disruption. Corporations were selling their real estate management services on the strength of their brand name, using a traditional approach to transactions. The time was ripe for sustainable innovation. I identified a huge market that was ripe for outsourcing the management of all their real estate with centralized transactions. Our disruptive, better alternative transformed an existing market and helped propel my company, USI, to a 40% compounded annual growth .
What About You?
Are you ready to defy convention with your own kind of disruption? You may be fresh out of college or a frustrated corporate professional. You may be an empty nester with the vigor of experience and the eye for a revolutionary idea.
Your unique competence or talent can transform a market when it least expects it. Spread your wings and allow your visionary innovation to breed disruption!
What newest innovation has inspired you? Have you created your own? Or, share something you think will make a disruptive splash on the market!
Please share in the comments.
Ed McLaughlin is currently co-writing the book “The Purpose Is Profit: Secrets of a Successful Entrepreneur from Startup to Exit” with Wyn Lydecker and Paul McLaughlin. Copyright © 2014 by Ed McLaughlin All rights reserved.
Ford didn’t create a new innovative disruptive product. Nor did Apple with their iPad. What they created is a disruptive market, where they took a brilliant innovation (a car or a portable music player), raised the perception of value and offered an attractive price (for the value). That, is brilliant !