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Lately, I've seen a lot of discussion around disruption vs. innovation. The question always arises: Are they the same?
I believe that disruption is simply the result of the rapid evolution of a business. The words disruption and innovation have become almost interchangeable ever since Harvard Business School Professor Clayton Christensen coined the term “disruptive innovation” in the 1990s. It wasn't until recently that I took the time to consider the relationship and differences between disruption and innovation, and how each can affect or alter a company's path to success.
Ever since Christensen shared his theory with the business world, the two terms have been constantly confused with each other, making untangling the definitions vital. According to the traditional definition of disruption, the process comes about in two different ways.
The first is from a low point in a market where the typical customer is overserved by the incumbent companies.
Alternatively, disruption occurs by focusing on low-end customers who are underserved or not served at all by a current market.
If a new market is created, or the needs of the low-end consumer begin being satisfied en masse, that's when disruption occurs, or when rapid evolution is apparent.
No market is safe from disruption, which can occur across all industries. A PricewaterhouseCoopers survey of 1,379 chief executives found 60 percent said that their sectors have already been changed or reshaped. Seventy-five percent of those surveyed anticipated that they would see their market disrupted by the year 2022.
Innovation or rapid evolutionary innovation, as I define it, is turning your dreams into reality, or manifesting what you envision. Disruptive companies are those whose innovations or innovative processes completely change the market they serve. They might use an innovation to accomplish their goals, but not all innovations are disruptive. In other words, not all innovations cause a business or market to rapidly evolve. I firmly believe that all businesses must evolve over time in order to stay competitive in the marketplace, and that has shown to be true when it comes to disruption. Companies need appreciable time for their services to evolve and react to the needs of the market.
Disruption does not happen overnight; neither does success. There are many so-called “overnight successes” that have actually been around for decades before finally reaching the tipping point and having mass appeal or nationwide/worldwide recognition.
There are also no overnight reactions to a market disruption. According to research published by Capgemini, nearly 74 percent of incumbent businesses take over two years to react to unfolding disruption after its occurrence.
Disruptive companies like Netflix did not change the media industry overnight. Netflix survived long enough, staying in business each day, even during lean times, which allowed it to disruptively pivot from its mail delivery strategy to streaming online content. This would not have been possible without technological innovations. Using streaming technology and presenting content in a different way created a revolution in the way that media is consumed, which we are still seeing today.
Although it's less common, you can also disrupt the high end of a market. One of my mentors, Sydney Frank, accomplished a disruptive approach to selling vodka, something that had nothing to do with a technological innovation. Frank realized the viability of a vodka market that over-served consumers' mid-range products. He then created a French distilled vodka that didn't cater to the lower economic class. Instead, Frank catered to the high end of the market with a million-dollar commissioned bottle, in addition to other premium-priced products, forever changing the distribution and sale of vodka worldwide.
I personally would rather be known for my rapid evolutionary disruption in the philanthropy space. We have raised more money with my 50 For 50 campaign and the recent weekend's Unstoppable Gala than in the history of the nonprofit's existence. I want to be known as a disruptor who is affecting and impacting thousands of people by giving them water, food, financial services and health care to empower them to empower others. Not to give a handout, but to give a hand up.