5 Steps to Disrupt Markets

Disruptive Innovations affect markets by offering products or services that are typically:

• Cheaper
• Faster
• Higher Quality
• More Efficient
  
• More Durable

If your company’s goal is to grow profitably then you need to understand how to begin disrupting the markets it serves and in the process take market share away from competitors.  Disruptive innovations are rarely Big Bang type changes, usually they are smaller, incremental and evolutionary changes to existing products that are perceived by customers as offering better value than currently available.

Here’s a graphic from Harvard professor Dr. Clayton Christensen, who coined the term to help explain how disruptive innovation works.

Five Steps to Disruptive Innovation

1. Take a hard and detailed look at the markets your company serves, the products that are sold and the competitors that are active.
2. Understand the “trajectory” of increased product performance over time in each market your company serves.
3. Research customer buying behavior in each market - determine what changes are evident in the performance of products demanded by customers.
4. Find opportunities for disruption when the product performance offered by sellers exceeds the performance demanded by customers - in other words the trajectories are different.
5. Now your company can work to develop products or services that meet the performance demanded by customers at a lower price and offer a better perceived value.  These products will disrupt competitors who have overshot with their offerings.

Of course there are challenges for companies that desire to offer disruptive products and it’s important to be aware of these challenges from the beginning.

• Disruption and commoditization go hand in hand.  Companies that overshoot with their products simply won’t win in the marketplace because either disruption will steal markets or commoditization will steal profits.  Be prepared to understand that where the money is will shift in markets as these markets are disrupted.
• Disruptive innovation requires a separate strategic viewpoint - it must continually evaluate emerging, unanticipated problems, successes and opportunities.
• Understanding what customers really need and will buy is difficult and requires understanding customer buying behavior.
• It’s difficult to achieve profitability quickly with disruptive innovations, these products take time to emerge and become visible to customers