A few days ago, I wrote about disruptive innovation in the local papers where I live. Disruptive innovation interferes in our business everyday life – whether we want it to or not.
NB! This blog article was initially published in October 2016. It has been updated a little since then.
Disruptive innovation is so new that it is not yet featured on the website Store norske leksikon.
It is a term that is so important for you if you are running a small company that if you are not yet familiar with the meaning of it, you should keep reading.
A definition for disruptive innovation could be:
“Innovation that disrupts an existing market and shoves market leading companies and products out of the way.”
A bit more down to earth: When did you hear the term TV for the first time? I’m guessing it’s not so long ago.
Until a few years ago, all TV was linear. We sat down just before the announced show started.
These days, fewer and fewer people do this. Apart from soccer matches and other sports excitement, we pretty much choose when to watch what. The age limit for fans of linear TV constantly creeps up.
So what happens with the old ways to do it when we choose non-linear living pictures from HBO, Netflix, Itunes, Google, Youtube, NRK, TV2 Sumo and other channels whenever we want?
There is a certain risk that it will end up like this case:
The tiny business knocked out the giant
A few years ago there was a massive company in the USA called Blockbuster. They rented out movies, and they had a turnover of billions of dollars per year.
One day in 2000, Blockbuster was visited by a small trader that had invented something new within the industry. Blockbuster was also offered to buy the tiny business.
Something that they kindly (I assume) declined.
What happened next was nothing more than the tiny business called Netflix shoving the market leader aside. Blockbuster went bankrupt in 2010, while Netflix is still kicking.
Example of disruptive innovation
Netflix is an example of a disruptive innovation, and we also remember what happened to Kodak when the digital photos were introduced. And how Nokia started playing catch-up after the smart phones entered the market.
We see and will see the same within many businesses: Travelling (ordering online), accommodation (Airbnb, onlyapartments, boligbytte etc.), transport (Uber), courses and teaching (e-learning), payment solutions (Stripe, Izettle), the restaurant industry (Nabomat), groceries (Brødboksen, various meal kits) etc.
And this will escalate once we really start using available and upcoming technology.
A few days ago, when I was visiting a friend running a printshop nearby, I got a moment of realisation. Under the visitor’s table there was a photo album with photos from the local printshop history. There was, among other things, a photo of a funny machine that was made in 1918, and was still running at the end of the 70s. The circulation rate has exploded since then.
The small ones are behind disruptive innovation
The most exciting thing about innovation is this: Most of the time, it’s outsiders and entrepreneurs that are behind it – not the market leaders.
These are good news for us who run small companies and have a dream/plan to grow.
Developing a disruptive innovation can take a long time, but according to Wikipedia, the growth will often be very quick when the innovation is already in the market.
So who knows: maybe disruptive innovations are going on among outsiders or entrepreneurs among Miniforetak’s members?
Image source: Insidermonkey.com/Flickr