Has the Disruption Metaphor Outlived Its Purpose?
The concept of disruptive technologies has had a long, fruitful life. But nothing lasts forever. Venture capitalist Marc Andreessen tried to bring attention to the concept through 17 tweets earlier this month, but it seems to me that now would be a good time to let this concept shed its mortal coil.
This past summer the concept came in for some criticism at the hands of a Harvard history professor in the pages of The New Yorker. Then this month, Andreessen struck back in a less august forum. Two of his most salient tweets included “Few intellectual concepts in our time have been mangled by observers more than Clay Christensen's disruption idea” And “It’s a fabricated myth that disruptive innovation is about destruction: It's about creation -- new products, new choices, for more people.”
Harvard Business School professor Clayton Christensen initiated the idea with his 1997 book, The Innovator's Dilemma, by defining two kinds of technologies: sustaining (those that make incremental improvements on a company's existing products) and disruptive (those that serve different customers with a different value proposition and distinct channel partners from the company’s core one).
An example is online news in the form of listicles delivered to young users on their smartphones rather than long multipage articles consumed by 70-year-olds after newpapers are delivered by drivers to their homes.
Christensen argued that companies should set up disruptive technologies in separate subsidiaries to "kill" the parent. Since the late 1990s some companies followed his advice, creating such subsidiaries to help manage the disruption of the Internet.
Yet, by 2001 some of those publicly traded subsidiaries, such as BarnesandNoble.com and NBCi, which Christensen tried so vociferously to defend were spun back in after the dot-com bubble exploded and their true financial picture -- as money-losing companies with no access to further capital -- became crystal clear.
As I wrote for Entrepreneur.com in June, Netflix’s successful transformation from a DVD-by-mail service to an online streaming one was led by its CEO, Reid Hastings, the very opposite of the separate silo effect that Christensen prescribed for handling disruptive technologies.
Marc Andreessen's 17 tweets on disruption make several points in defense of disruption theory. Among the most interesting is the notion that disruption is a democratizing force that makes excellent products and services previously accessible only to the wealthy available to more people with lower incomes. Andreessen also suggests that it's a myth that disruption is destructive.
I think Andreessen is right and wrong. Consider the case of Uber. This ride service driven by an app does make it less expensive for people to get around, except during periods of surge pricing. And it also provides people with vehicles a way to make some extra money -- as long as they're willing to be on call to drive people and perhaps be paid a lower amount without employee benefits.
Uber is disruptive to the taxi industry. And it also could be destructive to consumers: The Guardian reported Dec. 8 about a claim of a rape in New Delhi allegedly committed by an Uber driver.
Two California attorneys general filed suit against Uber earlier this week, claiming the company had not been up-front about the level of its scrutiny of drivers in its background checks. In response, Eva Behrend, a spokeswoman for Uber, told The New York Times in a statement, that “Californians and California lawmakers all agree -- Uber is an integral, safe and established part of the transportation ecosystem in the Golden State."
I believe that Uber is also destructive to the incomes of taxi drivers. But if you are an Uber investor, perhaps your desire to cash out on its stock blinds you to the fact that taxi drivers and their colleagues are people with families whose way of living is threatened by the company. In short, Uber is disruptive and destructive.
If not disruption, what?
The reason that the concept of disruption has passed its sell-by date is that it has become a meaningless slogan. I think Christensen's prescription for how companies should manage such technologies is wrong and that Andreessen's defense of the value of disruption is one-sided.
I believe that if Christensen and Andreessen wish to support a rallying cry for startups, a better one would be that these companies should deliver potential customers "a quantum value leap," a solution to a pain point that rivals are ignoring, as I outlined in my book Hungry Start-up Strategy. This would force entrepreneurs to think about their companies from the standpoint of customers, who will decide whether to take the risk of spending time and money on a venture with high odds of perishing.
To persuade potential customers to take that risk, a venture must find human pain -- some problem that no other company is trying to solve. And then the startup must deliver a solution to that problem that really works -- preferably at a much lower price than any related product.
A compelling example of a quantum value leap is presented by Actifio, a startup I described in Hungry Start-up Strategy that saves big companies from needing to make as many as 12 different copies of their data to do different functions like file backup and testing new applications. Before Actifio came along, companies had to spend millions to copy and store all these different copies of essentially the same data, which was a gigantic pain.
Actifio's quantum value leap is that for every $1 invested in its technology, companies save $12.
That's the kind of rallying cry that makes a compelling case for the prosperity of a new venture.
Related: Disrupting the Disruption Myth