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Disruptive innovation is a hot topic right now in business and tech circles. What does it mean, and why should you take note?
Below, you’ll find a brief guide to disruptive innovation: what it is, what it looks like, and why it’s important for companies and consumers.
What Is Disruptive Innovation?
In the simplest terms, disruptive innovation makes previously-exclusive products and services more accessible. For meticulousness’ sake, let’s tease that definition out a bit.
Disruptive innovation happens when a new idea or technology (or both) broadens access to a sophisticated, costly and/or previously unattainable product or service. A business can harness this disruptive innovation to gain a competitive edge, either by creating a new market or serving overlooked segments of a market.
In the past, companies embracing disruptive innovations have shaken up industries, grown exceedingly quickly, and even displaced long-established, market-leading industry incumbents.
Examples of Disruptive Innovation
When Clayton M. Christensen coined the term “disruptive technology” (which he would later amend to “disruptive innovation” to place emphasis on the process as a disruptive vector, rather than the tool), he used disk drives as an example.
In the 70s, the big companies in the hard drive industry were building bigger and bigger drives – serving large organizations with deep pockets who wanted to build massive mainframes. As hard drive technology accelerated, it left room for smaller companies to build drives geared toward “low-end” customers. These small disk drives eventually became the backbone of personal computers. Suffice to say, personal computers became a much more profitable business than building organizational mainframes.
Fast-forward to today, and that same process is playing out in various industries. For example, disruptive innovation recently shook the real estate industry. Traditionally, real estate agents acted as gatekeepers, limiting publicly shared information and waiting for buyers and sellers to come to them.
Nobul upended that dynamic by creating a digital marketplace where agents actively compete for buyers’ business. As founder Regan McGee puts it, “Nobul brings choice, accountability and transparency to an industry that has – for decades – been widely regarded by homebuyers as opaque and challenging.” He adds: “Anytime you bring innovative technology to the table that can make the process easier, it will be viewed as disruptive.”
Why Is It Important?
Disruptive innovation doesn’t just benefit consumers; companies that embrace a disruptive mindset can gain an edge over competitors.
Here are a few reasons why disruptive innovation is important:
- Market Accessibility: Disruptive innovation allows new markets and market segments to access products and services, giving new consumers a chance to enjoy previously-prohibitive commodities and allowing new businesses to flourish.
- Iterative, Self-Analytical Businesses: Disruptive innovation can force businesses to be more self-analytical and iterative, improving the quality and reach of their offerings.
- Talent Attraction: An innovative mindset can help businesses attract diverse, high-quality talent.
- Open-Mindedness and Adaptability: An innovative mindset attuned to disruption can help you future-proof your business. Displacement is a by-product of complacency; businesses that constantly strive to innovate and disrupt are better poised to react to industry changes.
As new technologies emerge and new thought leaders enter the scene, expect to see more disruptive innovation on the horizon. If there’s one constant in business, it’s change.