Twenty years back, the ordinary public of India had access to landlines, and today, each member of the family has their own personal smartphone. What happened? What brought such a massive shift in the needs of a consumer in the passing years? What were the factors responsible for this shift?
In this article, we’ve explained how disruptive innovation, on multiple levels, has led to the expansion of India as a consumer and as an economy.
What Is Disruptive Innovation?
Disruptive innovation refers to an innovation that creates a whole new market and value network that eventually disrupts an existing market by displacing a consumer’s wants to act.
Disruptive innovation (1), a term of art coined by Clayton M Christensen (2) in 1955, is described as a process by which a product/service takes root initially in simple applications at the base of a market and then relentlessly moves upmarket, eventually displacing the established competitors.
It is both a revolutionary as well as an evolutionary term that transforms a product that was historically so expensive and complex that only a few wealthy people, with resources, had access to them, into a low-cost product’s alternative that makes the market relevant to the industry.
Disruptive innovation is one of the following:
- A cheaper product alternative
- Fulfilling the same or similar desire with increased ease of management
- An accessible business model
- A technological innovation
Disruptive Innovation: Conditions
A venture must fulfill these essential conditions to qualify as a disruptive innovation:
- Operating in a low-profit & low-end niche in the market
- An innovative, profitable business model
- Enabling the latest technology usage
- Scaling & upstreaming business model
You can read more about Disruptive Innovation on this paper published by the Harward Business Review by clicking here.
5 Examples of Disruptive Innovation:
Disruptive Innovations have led to a whole new market shift with the public, focusing more towards the streams than ever before. Read these five examples, which will help you understand the concept of disruptive innovation better.
- Online Food Delivery Services
Video streaming took over the masses in a completely different way. It started way back as simple television but transformed into a whole new entertainment section with the introduction of Netflix, the guru of video streaming.
Renting DVDs and CDs had a significant demand earlier in the 90s. Netflix created a low-cost way for people to watch shows & movies that eventually disrupted the cable and video rental industry. Today, after 22 years of its existence, Netflix (3) stands as the most subscribed video streaming service in the US and worldwide.
Fact: In 2019, Netflix has a total of 158 million subscribers (4) worldwide, 60.62 million from the US & over 5.5 million free trial consumers.
Smartphones have changed the way we accessed the internet through its app business model that disrupted computers and laptops as a primary way of consuming the internet. Today, half of the generation operates web surfing from their phones rather than desktops.
iPhone, for example, is one innovative smartphone that spread as widely as a disruption, which caused the laptop market to collapse. With the use of the app business model, Apple (5) was able to change how we interact with online services and products, thereby opening doors to services that never existed.
Fact: According to a research conducted (6), Mobile traffic for web search grew up to 222% in the last five years.
Remember the time when traditional encyclopedias like the Encyclopedia Britannica (7) set gold standards as trustworthy information and reference guides. The introduction of online encyclopedia service like Wikipedia (8), however, changed the reference service game forever.
At first, Wikipedia was not trusted as a reliable source of information. It took them over a decade to put the traditional encyclopedias out of business.
Wikipedia disrupted the traditional encyclopedia industry with its free and informative service available to users across the world.
Note: Disruptive innovations don’t always overthrow an incumbent overnight. Sometimes, change takes time but certainly disrupts the entire market.
4. Online Food Delivery Services
The birth of omnipresent food delivery services has transformed our eating habits. For what used to be a healthy and nutritious meal has been changed to greasy and cheap junk food.
Food delivery services come in handy and are incredibly convenient to use, which is why gluttony has become the one sin each individual is ready to adopt.
Some inventions that hold the potential of being the future disruptors in the food industry are:
- Smart kitchens
- Smart Food
Airbnb (12) started back as a low-end accommodation service for travelers who used to rent out airbeds. The company’s business model was all set to disrupt the hospitality industry with its affordable rentals available to travelers from across the world.
As Airbnb grew in size & popularity, the quality offered for the rentals increased. Yes, it might not give you a Marriott (13) like service but can definitely provide you with a comfortable and neat apartment at your favorite destination, anywhere in the world.
Fact: Airbnb has seen a 153% global compound rate since 2009 (14) and has seen the total number of users on Airbnb increase to more than 150 million.
Overall, disruptive innovation has always been a constant part of our economy. We are making our lives more convenient and comfortable each day with the assistance of such disruptive innovations. Some of the futuristic disrupters that have already entered our market are AI, Virtual Reality, Augmented Reality, IoT, 3D printing, Robotics, etc.