Disruption: The Common Thread Between Startups And Innovative Companies
In the world of innovation, there seems to be two different types of companies operating. There are startups, whose goal is to come up with the next big thing so that they can grow. Then, there are the established companies who know they need to innovate to stay at the top of their game, and want to “think like a startup.”
While companies at both ends of this spectrum may seem to be very different from one another, they have one common goal; to disrupt the industry they operate in.
You will find many different definitions of what it means for a company to be disruptive, but Clayton M. Christensen’s definition stands out, which is “an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products, and alliances.”
For startups, this may come easy. Many are born because they see an opening in a marketplace that will change how it currently operates, and they build a company around it. They exist to be disruptive. As Emily Howard says in Fast Company, “When your entire purpose as a company is to create something that never existed before, it trickles through the entire culture.”
But why would a company with a well-established marketplace want to disrupt their current line of business? There could many answers to this question, but most of them come down to moving their companies forward and staying relevant.
Sometimes, to do so, you have to be willing to disrupt the current way of doing things. Often marketplaces seem to change overnight. Take streaming technology, for example. 10 years ago it would not have been possible to stream anything because the quality would have been too low, but, as technology improved, businesses saw it’s potential and were forced to disrupt the way the trajectory they were previously on.
Apple once had a great business of selling mp3’s through iTunes, but as soon as technology allowed for streaming music, they had to disrupt their business model and build Apple Music so that they could compete with other companies already harnessing the potential of streaming, like Spotify. This is similar to when Netflix changed from a mail order DVDs company into a video streaming company (which we have spoken about in a previous post). They had to disrupt their own line of business to keep the company moving forward.
However, disrupting a current working business model isn’t always an easy thing to do. Professor Steve Blank points out in a Medium article several reasons why it’s harder for established companies to disrupt their current business models. From having to please shareholders to only understanding the current business model and not being able to see how to change it while still making money, making large shifts can be quite hard. Blank goes on to say that if companies want to stay relevant, they need to look for ways to extend and then disrupt their own business models.
So while disruption of your current industry may not sound like something that many companies would want to pursue, sometimes it’s what needs to be done. This is why today’s businesses need intrapreneurs and should be helping them to flourish. They need people who can uncover disruptive ways to change the way they do business and give them room to do so while the rest of the business carries on.
On the surface, startups and large organizations may seem very different, but they are united in the common need for disruption. Startups can often focus primarily on methods of disruption, while established companies should focus on keeping their business going while still dedicating resources to finding ways to disrupt themselves.