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Many startups believe that in order to gain recognition from potential users or investors, they need to disrupt the market – or at least claim that they have the potential to. The problem with this is that ‘disrupt’ has become one of the most worn-out buzzwords in the tech scene and every innovation is expected to establish a new market, open a new segment, and render an existing technology irrelevant, when in reality, true disruption is rare and unpredictable.
According to Prof. Clayton Christensen from the Harvard Business School, “disruption theory is in danger of becoming a victim of its own success” due to the fact that the “the theory’s core concepts have been widely misunderstood”. As a result, the market is inundated with companies who may even believe they disrupt the market, but in reality they simply make something better. The good news is that doing something better than competition is not a bad thing and can often lead to long-term success.
So who truly disrupts? And where is the market for simply better solutions? That’s what we’re here to talk about!
What Constitutes Disruption in the Market
According to Prof. Christensen, the core of disruption theory starts with small companies who possess few resources that manage to pose a challenge to enterprises and established companies – but that is not the only thing that makes an innovation or technology disruptive.
For a company to truly disrupt the market, the disruptors must come into the market from an overlooked segment of the market or even non-consumers in the industry, thus establishing a strong position in whatever industry they are aiming to disrupt before moving in on the mainstream clients. Once they are able to convert non-consumers to consumers as well as lure mainstream customers in high volumes, impacting the operation of the incumbents, then disruption has occurred. A great example of a true disruption to the market can be seen with Airbnb. The company offered a product that the large competitors completely overlooked, and that was a different type of accommodation while traveling. Initially the company catered to individuals who sought a low-cost alternative to hotels, however today, they are taking away customers from the larger incumbents by offering boutique, high-end and no longer low-cost alternatives to traditional hotels.
Beyond entering through overlooked segments and taking customers from enterprises, disruptive innovations are those that do more than simply offer a different product, service or solution, but that actually have a different business model or approach to the problem. What this means is that a singular, or even multiple differentiators, do not constitute a disruption; especially if that differentiator is, as they often are, price-focused. Oftentimes new technologies enter the market with similar features to what already exist but at a fraction of the cost, believing that will cause a disruption, however, the moment those companies need to scale and innovate, they will need more manpower, resources and inevitably, income.
Building a Foundation with a Sustaining Innovation
Companies that do not classically disrupt the market do not need to despair – there is room in the market for innovation that improves existing products or solutions, and that is a sustainable 
innovation. Startups that recognize their ability to improve or sustain innovation have ample opportunity and may even enjoy an easier start due to the customers’ openness to the industry and desire for improvement – a start that may lead to developing a disruptive innovation down the line.
Whatsapp is often hailed as a disruptive communication startup, but a quick examination of their business model from the start shows that they didn’t disrupt the market – they simply offered a simpler, more accessible and cheaper alternative to what was available. That fact didn’t make them any less valuable to Facebook, who purchased them for $19 billion in 2013. Some companies establish their position in the market as a sustaining innovation and then evolve into a disruptive one. Uber’s position as a disruptive or sustainable innovation was originally debated upon launch and throughout early success. Initially, Uber did not start by the lower end or disregarded segment as expected of disruptive innovations, but rather launched as a car service positioned directly at the top of the market. Furthermore, Uber did not create new markets but rather entered in locations where taxi services were widely used but offered customers a better experience for a lower price. The introduction of UberX, a model similar to that of Airbnb but for transportation, was when Uber finally disrupted the market by offering a true alternative to taxies.
The Future of Sustainable Innovation
Sustainable innovations do not need to evolve into disruptive ones in order to succeed. In fact, the recent shift trend of creating collaborative innovation is much more aligned with sustaining innovation. Startups, whose innovations are improvements or simplifications of existing solutions often have a much better chance of running PoCs with enterprises and ultimately, even being acquired by the enterprises themselves.
When enterprises choose to bring an outside innovation in-house, they do it because they want the technology and oftentimes a startup with fewer resources has come up with a way to make what they have better. This breeds collaboration and long-term growth both for the startup and for the enterprise. Disruptive innovations on the other hand, which are often created with the intention of replacing the enterprises, will often see less reception towards collaboration and may encounter more difficulties along the road to success.
Ultimately, there is room in the marketplace for both types of innovations – but only few will manage to truly disrupt industries; the rest of the startups will have to settle for improving and sustaining innovation, something we’re totally ok with!
