Disruptive innovation and entrepreneurs
The Bob Pritchard Column
Disruptive innovation and entrepreneurs go hand in hand. Entrepreneurs are often the ones that develop new products or services that change an entire industry. But before we get into the reasons why that is, it’s important to ensure we’re all talking about the same thing.
“Disruptive” has become much like the word “innovation”—both are used so often and to describe so many different ideas that the real meaning often gets lost in translation.
Disruptive innovation is, “a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.”
Disruptive innovations are:
- Affordable to a large group of consumers
- Simple to use
- Improved upon and continue to take a larger share of the market
Incumbents in the market don’t tend to focus here, instead choosing to modify existing products, concentrate on producing higher-priced products and enhancing the value for current customers.
This open space should be good news for entrepreneurs, who can start small in a niche market, and then build the product to appeal to wider and wider groups of people. Startups don’t necessarily need to be intimidated by bigger players either, as established companies are probably not interested in developing these low-margin products and are usually very slow to introduce new initiatives.
But, just because an entrepreneur has a potentially disruptive innovation, doesn’t mean instant success (or success at all). It can take a long time for a product to reach a large audience. For example, it took six years for the smartphone to reach a 50 percent adoption rate in the US.
Where might a disruption happen down the road? One scenario is in the electric vehicle (EV) industry. It’s argued that electric vehicles are not disruptive, because, compared to cars today, EVs are not cheaper or simpler to use; nor do they reach new consumers. And more significantly, all the major car companies are developing their own EVs.
Certainly, the definition leaves open the possibility that any industry can be disrupted, including education. Higher education could be disrupted by online institutes that are creating cheap (sometimes free) courses that are simple to use, and can potentially reach a large group of students, from all over the world. Whether these changes will lead to a disruption, only time will tell.
To reiterate, a technology may have a significant impact on an industry, but few products are disruptive since they don’t create new industries. When pitching an innovative product, “valuable” or “groundbreaking” might be more appropriate adjectives. Then wait to see if it is disruptive.
Looking forward to REFERRON being seen as a disruptive technology!!!!!