- Disruption is an innovation that improves a product or service in unexpected ways and lowers price or brings value to a different set of consumers.
- Sometimes disruption comes directly from technology. In other cases, it comes from strategy and business models (which may or may not have been enabled by technology).
- Disruption may consist of off-the-shelf components put together in a simple fashion to bring value to a new market, or more commonly, to the lower end of the market (un-served or under-served). If the rate of improvement is significant, the solution then moves up-market.
- Disruptive solutions initially have lower gross margins and smaller markets.
- Example, Digital music’s disruptive effect on music CDs.
Disruption through technology
- How can I use technology to disrupt an established industry?
- Can I make an opaque part of an industry transparent and cost-effective?
- Is the industry fragmented?
- What will the customers need one/three/five years from now?
- Can disruption be brought through a hybrid of technology and human processes?
- Use a rapid application development tool to quickly launch a solution and see if/how customers use it.
- Define market segments in terms of “different people”, not in terms of “product usage”.