What is Disruptive Innovation
Disruptive innovation is the use of current methods of delivery that exist in other businesses and implementing them to change the game in established ones.
Business Disruptors don’t enlarge the size of the revenue pie, but rather transfer a piece to themselves by inserting their services in the middle, often providing faster or easier access or a reduced price. Here are several examples:
When Blue Nile came on the scene in the early 2000s and successfully introduced online diamond shopping, the company used disruptive innovation. It took an established old world business (the diamond trade) and introduced existing technology (online shopping), then added price and quality transparency to a market that clearly had none.
The end result is that Blue Nile took out the middleman and reduced the cost to end customers by 30-40%.
Open Table used disruptive innovation by inserting itself in the middle between the customer and the restaurant. Now, if a restaurant is not listed on Open Table, there is a good chance their tables will not fill, as customers have become accustom to booking online through Open Table.
The end result is that Open Table consolidated restaurant bookings in one easy to use platform with ratings, availability and substitutions all conveniently available on one webpage.
Uber is the ultimate business disruptor. With the use of a basic app on both the customer’s and driver’s mobile phone, Uber is on the verge of putting the taxi and black car service industries in most major cities out of business. The company contracts with millions of drivers globally and takes the “phone call” and black car service “blackout time” out of the equation. Within 30 seconds of making a selection, the nearest Uber driver calls the customer, introduces himself and arrives within a few minutes knowing exactly where to go. Further, there is no cash or credit card transaction at the end. It’s all billed to the Uber account.
With it’s virtual fleet of millions, the end result is that Uber has consolidated car/taxi service globally and has removed the two things people hate most in cars for hire: wait time and calling the car company and being put on hold.
What other Disruptive Technology is possible?
Here are five examples that I thought of while writing this article:
1. Pizza delivery
2. In home massage
3. In office shoe shine service
4. New car purchases
5. Automobile oil changes
That took me 30 seconds. Imagine what you can do it you really put your mind to it! The point is that most disruptive innovation takes old world products or services and adds a new world overlay, taking a portion of the profit out in the process.
What are five old world products or services in your community? Is there a more effective way of getting those or products/services to the end customer?