Using disruption innovation theory to develop your business

Guest post by Tom Moore of iAM Learning

The term ‘disruption’ was defined and first analysed by the American scholar Clayton M. Christensen and his collaborators in 1995, and has been called the most influential business idea of the early 21st century.

It’s proven that small teams are more likely to create disruptive innovations than large teams. A disruptive process can take longer to develop than by the conventional approach and the risk associated with it is higher than the other more incremental or evolutionary forms of innovation.

But once it is deployed in the market, it achieves a much faster penetration and higher degree of impact on the established market.

As incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others.

Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality — frequently at a lower price.

‘Disruption’ describes a process whereby a smaller company with fewer resources can successfully challenge established incumbent businesses

Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously. Entrants then move upmarket, and when mainstream customers start adopting the entrants’ offerings in volume, disruption has occurred.

Working as part of a small team with a big vision, here are my top tips for taking your business to the next level from a disruptor’s point of view.

Take the long-term view

Focus on the business model as much as the product or service. When you are doing something in an existing market in a new way, it will take time to get established. For example, as a business, it would be easy for us to get tempted with lots of new ideas, but we’ve used a combination of core staff and freelancers to grow our priority subscription products. This has proven to be the best way for us to scale our business.

Focus on your customers.

Traditional companies and those main ‘names’ in your business area will focus on the biggest market segments. But which customers have been overlooked? What do they require, what difference can your company make to their lives? It’s not what you do differently as a business but more importantly where you can make a difference.

Don’t be swayed by competitors.

There is an often-used mantra ‘disrupt or be disrupted’ and this can lead to companies moving away from their core mission and values. Stay on your path. Yes, you will need to make adjustments and improvements, but the fundamental reason you started the business – must not be overlooked.

Empower your staff

Common in start-up companies is a lack of managerial layers in a company structure. This means that all staff feel they can be ‘heard’ and valued, allowing for ideas to flow freely. This is where the magic can happen.

Not all companies will disrupt their market, but there are positive lessons that all businesses can take on board from the process of disruptive innovation, and this in turn will provide strength and longevity for that business in their chosen sector.

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