Disruptive innovation has usually been considered by established businesses as an attack that must be met through defensive measures. And indeed, disruptive technologies and business models have toppled many established industry leaders and will likely continue to do so. But the real story behind disruptive innovation is not one of destruction, but of its opposite: In every industry changed by disruption, the net effect has been total market growth. Moreover, disruption can be a powerful avenue for growth through new market discovery for incumbents as well as for upstarts.
There are several keys to the successful navigation of this growth path. The first is recognizing that established players have more time than they think, provided they take off the blinders that keep them from seeing beyond their current customers. Disruption is not an immediate phenomenon — it can take years and even decades before the upstart business encroaches heavily on the established market. The second is finding the new customers who are eager to be served by the disruption. That can happen in a variety of ways, and there is no magic formula. Managerial intuition, knowledge of a variety of markets and serendipity can all play a part. The third key is building an organization that is capable of serving the new customers. It’s essential for companies to abandon their usual ways of dealing with the established market and to let the new customers dictate the business model by which they can be profitably served. The examples that follow suggest how companies can put these ideas into practice.
Missing Out on New Growth
One of the reasons it is so difficult for managers in established companies to recognize disruptions as opportunities is that the new markets lie outside their existing resource base.1 They may see a market developing but incorrectly conclude that it is outside their company’s scope for products or customers. In the early days of the minicomputer, for example, IBM Corp. hired... To read the complete article, login or sign-up using the form below.
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