“Skate to where the puck is going, not where it has been.”

This quote by Wayne Gretzky has become a bit of a corporate cliché, but it doesn’t make the advice any less powerful. What makes your business successful and profitable today may not be where you should focus all of your energies; it is a continually moving target and you must think ahead in order to predict how things will change.

Part of this process involves hearing landmark examples of other companies who both successfully navigated disruption within their industries and those who fell behind and failed to compete in an evolved market. For example, the performance-defining component for Intel Microprocessors in the early 2000s was speed, or cycles per second (hertz). With the advent of Wifi and the laptop form-factor, the customer’s performance-defining component shifted to battery life. 

This shift caught Intel flat-footed, even though Intel was the one who developed Wifi in the first place, and they lost a substantial amount of market share to rival AMD. Intel was eventually able to weather the storm and shift its product line to this new performance-defining component, but not without a lot of organizational and financial pain.

Knowing that you should be looking to the future is all well and good, but how do you actually predict where your industry is headed? In Disruptive Strategy, Professor Clayton Christensen teaches his frameworks of innovation, helping business leaders understand where their industry is headed and how to stay ahead of the curve. 

A few of his learnings are summarized below:

1. Understand your company inside and out, especially your strengths and what sets you apart from competition
2. Be vigilant – stay informed and keep a close eye on competitors or new entrants within your industry
3. Encourage strategic thinking and new ideas within your organization

To better understand the predictive power of innovation theory, check out Professor Christensen's book, Seeing What's Next: Using the Theories of Innovation to Predict Industry Change.

Nearly 20 years ago, Professor Clayton Christensen was the first to use the term “disruption” in a business sense. From the beginning, Professor Christensen gave disruption a specific definition to describe specific phenomena. Over time, the meaning of disruption has diminished as many use it to refer to something that is “…cooler or faster or based around a more advanced technology.” Working directly with Professor Christensen over the last two years has helped me to see that correctly understanding disruption can yield profound insights to questions like:

• Competition: How do we respond to competitors? How do we position ourselves in the marketplace?
• Growth Strategy: Where should we look for new growth opportunities? How can we predict if our new ventures will be successful?
• Understanding Customers: What do our customers really care about? How can we uncover their true needs?

So what is disruption? Professor Christensen says that a disruptive innovation is one that “transforms a complicated, expensive product into one that is easier to use or is more affordable than the one most readily available.”

Recently, I sat down with Mark Johnson, co-Founder and Senior Partner at Innosight, to discuss the use of the term “disruption.” Johnson identified four common myths that, when dispelled, can bring greater understanding to what disruption truly is.

Myth #1: The purpose of disruption is to topple giants. 

Big disruptions tend to get a lot of media, like Netflix disrupting Blockbuster. However, Johnson says that it’s important to remember that these disruptions weren’t designed to destroy incumbents. “Rather,” he says, “the innovators succeeded because of their relentless focus on satisfying under-appreciated consumer needs, or what we call ‘jobs-to-be-done.’”

Myth #2: Disruptions always develop something entirely new.

Instead of introducing brand new technologies, many disruptions simply assemble existing elements and deploy them in a disruptive manner. Platform-based businesses like Uber are an example. Uber didn’t invent taxis, the internet, or apps. But the company assembled these components to offer a service that initially wasn’t as convenient as taxis. But over time Uber improved little by little, pulling customers into their market share.

Myth #3: Disruption is all about technology.

Disruption is not necessarily centered around technology. Many disruptions are business model disruptions. Here, Johnson gives the example of Warby Parker, an online retailer of prescription glasses. Many eyeglass-wearing people are overserved by in-person ophthalmology clinics. Warby Parker serves these overserved customers by utilizing a new, virtual business model. Warby Parker didn’t invent any new technology, but they introduced a new business model to a historically stagnant industry.

Myth #4: Customers care about inventions and innovations.

Johnson says, “What customers care about is whether a product or service enables them to do something that they could not do, or do well enough, before.” Companies shouldn’t be innovative for the sake of being innovative. To be successful, innovations must have purpose. Disruptions find traction only when there is a population of consumers who find the disruption useful in getting a job done.

One way to discover new growth opportunities is to examine people NOT consuming a product or service and ask “why?"

Consider, for example, home security systems. It can be argued that virtually everyone has the “job to be done” of “help me keep my home and personal belongings safe.” However, a relatively small portion of the population “hire” home security systems to protect their homes and belongings. Why is that? A large portion of the population live in rented homes and apartments. Not being established, these consumers are turned off by both the significant investment and lengthy contracts required to install a home security system.

So…how would you cater to this large market of unsecured homes and apartments?

SimpliSafe, a Boston-based startup, set out to fill this need. From SimpliSafe you can purchase a reasonably priced home security system that requires no contract and can easily be setup by yourself. SimpliSafe is a classic example of Professor Clayton Christensen’s theory of New-market Disruption:

• New-market Disruption: A product or service that offers lower overall performance but improved performance in simplicity and convenience. This type of disruption targets non-consuming customers who historically lacked the money or skill to buy and use the product.

For more on SimpliSafe, check out this article from BetaBoston: http://www.betaboston.com/news/2015/12/30/simplisafes-success-awakens-sleeping-giant/

On Monday, Google announced the formation of a new parent company, Alphabet, which will serve as the umbrella for all of its business units. 

Google has clearly recognized that several of its business units are fundamentally different in nature, with each requiring a different management of its resources, processes, and profit formulas (“RPP”). Perhaps Alphabet will bring the autonomy that these individual units need, and therefore, empower these units to manage their own disruptive paths.

Managing several different innovative and disruptive businesses is a common challenge that many organizations face. Too often, organizations try to nurture an emerging business alongside a core business, and the results can be disastrous. 

In order to grow and thrive, disruptive businesses must be given the opportunity to develop their own resources, processes, and profit formula. Each business unit needs to feel free to make the best decisions for their own situation.

For more on Google's restructuring and the formation of Alphabet, check out the following articles:

• Google Goal in Restructuring as Alphabet: Autonomy
  via the New York Times
• What is Alphabet, Google's new company?
  via Business Insider
• Google Launches New Parent Company Called Alphabet
  via National Public Radio

Interested in learning more about how to position your company to avoid disruption and harness new growth opportunities in an interactive, online class?