Misconstrued Disruptions

I am an engineer. I love technology. I love learning about technology. I work with people that share the same characteristics. I am in a small business that develops technology. Like all small businesses, we sit around and dream of the day one of our ideas topples a giant of the industry. Fame, fortune, glory, and the privilege of having our server get slashdotted one day. The term 'disruptive technology' even made it into our mission statement.

I just started reading a book titled 'The Innovator's Solution" by Clayton Christensen. In the early chapters the concepts of Sustaining Innovations, Low-end Disruptions, and New-market Disruptions are laid out.

As a bunch of tech happy geeks, we typically chase the bleeding edge, whiz bang technologies that we are convinced will change the world. It seems to us engineers that this is what you want to do, right? All the successful companies are playing in this high end of the technology market, so to get in the game this is where you need to be, with the best damn widget the world has ever seen, right? Not so fast...

In Christensen's book, these types of technologies are often classified as sustaining innovations. They are technologies that the market incumbents must constantly be improving to gain differentiation over the competition at the high end of the market. He makes some very compelling arguments that this is not where an entrant attacks should they wish to succeed (beyond lottery ticket probabilities) and that the incumbent will usually win if attacked head on with innovations of this type.

Then comes the Low-end Disruptions. This is where the entrant is usually successful. Finding customers that are overserved by the incumbent and providing a solution that is just good enough at a lower price point. Of course the entrant needs to have a business model that allows acceptable profitability at this lower price point, but that is much easier for the entrant to do than the incumbent, who's revenue machine is dependent on the big sexy market and can't afford even thinner margins on its low end products. Christensen states that the incumbent is likely to retreat when attacked at the low-end, giving a nice little market to the entrant. Over time the entrant leverages the wins move up-market, slowly chiseling most at all of the (original) incumbent's market. The entrant eventually becoming the incumbent and is then subject to attack on their low end.

New-market Disruptions exist with either a product that is just so new and wonderful that people buy something they didn't know they couldn't live without. However, it also includes technologies that take advantage of non-consumption. Providing a product alternative in a market where a demographic is untapped due to lack of appeal. A sometimes small change in the technology or business model opens to the door to more consumers.

As an engineer, it certainly gives me a lot to think about my motivations and strategies for development. Turns out true disruptions don't come off the bleeding edge and sometimes just need good old common sense and improvement on an existing market. Seems somewhat obvious after you read it, but I guess not being blind to the obvious is what makes disruption work.