Disrupters upend markets in plain sight

My first startup made T-shirts with a cartoon of a stealth fighter jet. Stealth mode. Fly quietly, under the radar. Catch the incumbents off guard. A familiar refrain.

Steve Blank recently released an article entitled “Blind to Disruption: The CEOs who Missed the Future.” He cites well-known “blind to disruption” case studies and then chronicles the failure of entire industry: carriage and wagon manufactures. As the internal combustion engine was emerging, he cited several reasons for their failure:

• Technological Discontinuity. Carriages were made of wood; cars, of steel. The skills didn’t transfer easily.
• Capital. Retooling for cars required huge investment; most small and midsize carriage firms didn’t have it.
• Business Model Inertia. Carriage makers sold low-volume, high-margin products. The car business was about high-volume, low-margin at scale.
• Cultural Identity. Carriage builders saw themselves as artisans. Noisy, dirty cars were beneath them.

In sum, disrupted CEOs (and in particular, hired CEOs rather than founders), he argues, were blind to the disruption they could not see.

Yes, but I think that misses the mark by half.

Clayton Christensen, the (late) “father” of disruptive innovation theory, believed instead that disruptive innovation happens in plain sight. The Innovator’s Dilemma (which describes the perspective of the incumbent) observes that, despite being well aware of potentially disruptive technology, the incumbent cannot appropriately respond. Why?

Because new disruption usually starts at the bottom of the market. Disrupters begin by targeting overlooked and underserved segments, often for customers who may not need, or be able to afford, the full capabilities of the incumbent’s offerings. The incumbent cannot and will not trade higher value customers for overlooked, underserved customers.

Also because early versions of disruptive products are often inferior on traditional performance metrics, but better on price, simplicity or convenience. As a result, disruptive innovations appeal to customers who do not need all of the attributes of the incumbent’s current solutions. The incumbent cannot and will not cannibalize its superior offering with an inferior, cheaper one.

The disruptive product steadily improves, eventually meeting the needs of an increasingly large share of mainstream customers. Once this happens, it’s typically too late. That’s when disruption occurs.

Disruption doesn’t occur because incumbents don’t see the future coming. It occurs because they are structurally motivated not to respond until it’s often too late.

So be bold, disruptors. They may see you, they may not. It doesn’t matter. Do your job, and don’t be afraid to let the whole world know. And when they do respond, it’ll likely be too late.

Bryan Lord is the co-founder, president and CEO of Pristine Surgical, a New Hampshire–based medical device company with a mission to simplify endoscopy. Pristine combines single-use arthroscopes with cloud-connected software and a subscription-based model to make minimally invasive surgical visualization more efficient, consistent and cost-effective. He resides with his wife and family in Bedford, NH.