Disruption Shouldn’t Be a Race to the Bottom

“Disruption” has become the catchiest word in the world of innovation and start-ups. The word that should be used by the techie dilatants is “Innovation”.  Innovation fuels the disruption of existing markets and product development. Disruption for disruption’s sake is what is driving the continued dilution of capital and resources. This, in turn, is taking markets that were once performing to high levels and pounding them into submission.

The start-up world is rife with examples of disruption for no reason other than reinventing the wheel (such as the proliferation of social media sites). Imitation is the sincerest form of flattery. Entrepreneurial funding has long skewed in favor of imitation because those risking capital like to support, whether consciously or unconsciously; ideas that have already been proven in the fickle 21st-century marketplace. True disruptive innovation is as rare as Steak Tartare.

In my opinion (i.e. this means I know nothing), joining a market space with a revenue model based on price more than true technological or service disruption (innovation) will defeat the ideal that drives entrepreneurial ideas and vision. Competition is what drives a true capitalistic economy. However; when disruption offers nothing to the consumer other than less cost, it isn’t disruption-it is undercutting. Lowering consumer price is wonderful and I am all for it, but confusing price reduction through innovation with disruption is not what innovation and subsequently, disruption are truly about.

Obviously, I am treading a fine line of syllogism. Lowering cost doesn’t mean that the product offered is any better than an existing one. Newly introduced products are trying to take market share, this does disrupt the market. This is economic disruption and not innovative disruption. Delivering new technology, product, or service that supplants existing ones is disruptive in the true sense of the word. This vision has been lost in multimillion-dollar escape strategies and growth curves.

The best example of disruption was the development and success of the iPhone. It redefined a technology. The cell phone existed in a form that was prepubescent at best, an underutilized and under visualized piece of technology before Apple waded into the fray. Apple disrupted the technology world by inventing the smartphone, not just the device but the entire operating system. Yet, it did not underestimate the value or what the consumer would pay for the new device. The disruption by Apple created new industries, new concepts, and even new vernacular. To this day, the iPhone still commands a high price with every iteration. The same cannot be said for the carriers who transmit the signals that let the user post to Facebook or check the weather.

They are engaged in a “disruption” of the marketplace. One not driven by innovation, but driven by user acquisition. The cellular model is flawed for this reason. New data transmitting technologies that have increased speed and usability. The transformation of the cell phone from a novelty to a powerful tool has left mobile technology companies in the dust. This is because they choose not to tie their networks to certain devices exclusively. This makes the only way to capitalize on their proprietary systems that drive the sales of devices a user acquisition model. This can only be achieved by lowering the prices for their services, not leveraging disruptive technology that could be purchased or developed. This is why they are engaged in a race to the bottom.

Author: Sean Johnson

Sean Johnson is the founder of 7x Strategy•Tactical.