Reaching the Technology Frontier

Applying the theory of disruptive innovation to your startup

BY JASON BELL

If a startup can get to the frontier of a technology and leverage its strengths as a small newcomer, it has a better chance of finding a foothold and eventually disrupting the incumbents.

Clayton Christensen wrote The Innovator’s Dilemma in 1997. In the book, he coined the term ‘disruptive innovation.’ The term has since entered the popular lexicon, becoming a regular topic of conversation in the startup world. The popularity of the idea suggests value, but society certainly uses it loosely, which sometimes leads to confusion. To properly apply Christensen’s insight, startup leaders must first understand the theory and its origins.

The best illustration of Christensen’s concept of disruptive innovation is the case study he used to develop it. It details how the disk drive industry came to be dominated by a group of small firms as opposed to the established ones. His central point is that big firms ignored the innovative technology of newer firms because of the latter’s inferior performance at the time. Eventually, the technology evolved to become superior to existing technology, allowing newer firms to take over the market, as the incumbent firms were too behind to catch up by that point.

Generally, disruptive innovations are new technologies that start by having worse performance than existing technologies, but eventually grow to dominate the market. Christensen’s theory is useful for academics, entrepreneurs, and managers. For academics, it solves the puzzle of why and how dominant firms with the best technology can fail to newcomers in a short period of time. For entrepreneurs, it provides a framework for attacking incumbent firms and technologies. For managers, it describes a threat and how to overcome it.

However, there exist some problems with the theory’s interpretation. First, while the concept of disruptive innovation is useful for making sense of firms that have already disrupted, it is much harder to apply it before a disruption. Second, big firms are not as clueless as the disk drive case study suggests, and since the notion of disruptive innovation has spread, they’ve become ever more careful.

Concerning the first problem, it’s important to avoid concluding too much from past disruptions. If you only look at successful disruptions in your industry, you may misjudge the reason behind their successes and waste time trying to replicate their approach. Rather than copying current or recent disruptions, look ahead to where the industry is going. Find the people on the frontier. You can run much faster with your eyes ahead than behind.

There are several ways to stay on the frontier. Follow academic literature about the industry, read blogs, observe investment decisions, and commit to research and development. Pay more attention to industry employees than customers. Talking to users or customers will reveal information about current technological offerings, but it won’t tell you where things are going next.

The best chance of success is when you know something other people don’t. If the industry is ignoring a new technology because of a particular problem, but you know how to solve that problem, then this opportunity will reduce the competitive pressure dramatically.

The second problem with the way most people understand disruptive innovation is that they believe big firms are destined to fail, as long as new firms are nimble and clever. We all love stories of success against the odds, the small overcoming the large, and the new replacing the old. But our desire to root for the underdog can leave us susceptible to misleading perceptions.

As it turns out, research suggests that big, established companies usually produce the breakthrough technologies that become dominant, not the small newcomers. This is partly because the established players are already at the frontier of the technology, and they are always on the lookout for who and what could disrupt them.

One way for a small newcomer to improve the odds is to leverage its strengths, such as increasing the pace of decision-making, development, and integrating customer feedback into the product. Big firms have considerable advantages in terms of resources, knowledge, and the ability to execute their vision at a high standard. But they are slow to approve of major changes, adopt an unproven technology, take innovations to market, and feedback is often not integrated into the product quickly.

If a startup can get to the frontier of a technology and leverage its strengths as a small newcomer, then it has a better chance of finding a foothold and eventually disrupting the incumbents. While the odds are not as good as some people think, it is certainly possible to take disruptive innovations to market. The rewards of doing so for startups, customers, and society are well worth the effort.