Disruptive Innovation

The concept of disruptive innovation has existed since 1995, but over 25 years on, much like the term digital transformation, the true meaning of disruptive innovation is widely abused. When we get sloppy with our labels, we often naively undermine the very future of the organizations we're serving because we end up using the wrong tools and lead people, and sometimes entire companies on a journey that is unlikely to result in the outcomes we need. My name is Rob Llewellyn and as you know, companies need people with the right capabilities to manage and lead transformation. As you know, orchestrating successful transformation isn't that easy. And I mean innovative transformation, which creates a new future without the constraints of the past. Which is why I hope that what I share in this episode will help you get better equipped to perform at your best as a manager, leader or consultant. If you want to learn more, go to studythrive.com so what is disruptive innovation? Well, it's a term coined by Clayton Christensen, referring to a process in which an underrated product or service starts to become popular enough to replace or displace, like we saw in the McKinsey video, a conventional product or service. And in true disruptive innovation, the product takes root in in the bottom of the market and in many cases develops a bad or even low class reputation because of it. However, due to the low costs and high accessibility or other advantages, that product eventually becomes more appealing than its contemporaries within the industry. Now, three of the primary sectors feeling the pinch these days are consumer products and technology. Enterprise software Security. In consumer products and technology we've got Rothy's, which checks all the boxes of a modern retailer. And it's become a social media phenomenon, has a rabid fan base and is focused on sustainability. It also has the benefit of a founding team with a Wall street background and a handy $35 million of investment from Goldman Sachs. Now the company sells flats and shoes for women that are made from recycled plastic bottles through a process that took four years to develop and perfect. Then we've got Fair, which is nicknamed the Amazon for local retailers. Now, Fair's goal is to transform the antiquated wholesale retail model and how retailers find and create relationships with new brands. Fair offers an online marketplace where artisans can sell their products. Now let's look at that security industry Contrast Security was formed to help companies address the vulnerabilities that are exposed in the application code of software applications that they buy or build themselves. And Contrast Platform automatically detects and fixes vulnerabilities and defends against targeted attacks without Requiring customers to conduct a scan or schedule an assessment. And this company was recently recognized by Gartner for its ability to empower developers to weave security into their code. Other firms like Proxy and Verkada also offer tools that enable smarter and secure use of devices. Then we've got enterprise software. Now enterprise software is one of the most attractive industries to invest in. MongoDB was founded in 2007 with a goal of disrupting the database industry. Now as you know, a database is where companies store all their data and is therefore one of the most important pieces of software that organizations use these days. Now the database market is is huge, roughly more than $60 billion and dominated by older tech giants like Oracle. Now MongoDB's incredible growth has come from its newer cloud offering called Atlas. And they added MongoDB added 800 new logos in its second quarter of 2019 to bring the total customer count to 15,000, essentially double where the firm was just one year earlier. You've got Front, which is an email inbox that allows teams to organize workforce conversations in one place and route information to the right people. Lattice takes a modern approach to corporate goal setting, making it easy for employees and their managers to work together on their goals. And Figma is a freemium cloud version of traditional design tools like Dolby and InVision. Then we've got the logistics and transportation industry. Next Trucking. It's an online marketplace linking shippers and carriers which aims to resolve imbalances that exist or traditionally exist between shippers needs and drivers availability. And you might remember the Dollar Shave Club. Now this is a really crude Startup launched in 2011 with its first steal of market share underpinned by just a four and a half thousand dollar promotional video. Some reliable but not earth shattering technology, but a business model to die for. Known for its budget friendly raises and renegade marketing tactics. In just a few years the Dollar Shave club disrupted markets that global giants like Gillette had dominated for over a century. Meanwhile Gillette had been busy with their digital change projects. But they weren't protecting against disruption, not transforming their business, doing what they've been doing, doing a very good job at for a in the belief that that was all they needed to do and that they were largely untouchable. But how wrong could they be? Because along came the Dollar Shave Club and in just a few years sliced away a healthy share of Gillette shaving market for themselves. To cut a long story short, the Dollar Shave Club eventually sold out to Unilever in 2016 for a billion dollars. Now there are Hundreds more examples, which while most people don't know about, they will, as time goes by, become more well recognized. You can see some of them is Casper. Casper came along and disrupted the mattress industry. Now traditional bedding companies have huge amounts of infrastructure, thousands of square feet in every store, and that's really inefficient. So Casper figured out a way to deliver mattresses same day or next day and dramatically cut down on shipping costs. Now, this company is already valued at over a billion dollars and yet they still see themselves as being in the very early chapters of their growth. Then we've got Stripe. The payments industry is experiencing significant transformation because of changing consumer behavior. And the industry has shifted from traditional checking or savings accounts to seamless one click messenger applications like AliPlay and WeChat. Payment firms like Stripe and Adyen, they are disrupting banks, credit card companies and payment processes. These big established firms are stuck with out of date infrastructure. And while trying to remain relevant by expanding into adjacent markets, their transformation efforts are largely quite uninspiring. As Steve Jobs once said, we're here to put a dent in the universe. And thousands upon thousands of entrepreneurs are busy doing exactly that. Which includes my own CxO transform education platform. And look at the kind of companies that we've educated who perhaps traditionally would have gone to these old large institutions. And there are many, many more startups that are potential disruptors. The examples of disruption go on and on. But what's less well known is how exactly new firms achieve their disruptive power so quickly without even being in existence for more than a handful of years. And how can big companies compete with this new phenomenon? If you want to take your transformation cap abilities and credentials to the next level, go to studythrive.com.