This is a post about two examples of disruptive innovations that I am witnessing right under my nose that are well poised to thwart the incumbents.
What is disrupting innovation?
‘Disruptive innovation’ is a broadly misunderstood term. Very few people use it words in the right context. The theory of ‘Disruptive innovation’ was laid out by Clayton Christensen .
According to him, “Disruption” describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.
“Disruption” describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.
Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others.
Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality—frequently at a lower price. Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously.
Entrants then move upmarket, delivering the performance that incumbents’ mainstream customers require, while preserving the advantages that drove their early success. When mainstream customers start adopting the entrants’ offerings in volume, disruption has occurred.
Image: From HBR
I have always wondered how does a new startup make a dent and even imagine to find its place in a market that is dominated by big players.
Here is a list of dominant SaaS players in different categories:
If you are a startup and are beginning to make a foray into a category, you can get easily overwhelmed. But the visionary startups do not compete with dominant players in their existing market. As explained by Clayton, disruptive startups try to look for a market that the existing incumbents ignore because of lower opportunity and potential.
Let me state this with an example.
At Autodesk, where I worked for over four years, we had ignored the CAD Mac market for over 17 years. Mac platform never surfaced in the product strategy. However, it was not to be. Mac’s marketshare had slowly but surely increased over the years.
After 17 years, Autodesk woke up from its slumber and decided to build its product for the Mac market. However, it was in for a shock. In the 17 years that it remained away from the platform, a little known player Vectorworks grabbed a majority share in Mac and grew in prominence and enjoyed the trust and brand loyalty of Mac CAD customers. It was going to be excruciatingly difficult to get back the share from Vectorworks.
There are numerous such examples and I am going to be presenting two of them that I see as obvious:
I am preparing slide decks for my upcoming keynote at Growth Camp, Brazil next week and any guesses what tool am I using for! It’s Canva. My entire slide deck is being built on Canva and I am going to be presenting from Canva.
How did Canva sneak into the slide deck scene?
This is classic example of disruptive innovation. While incumbents like Powerpoint and Keynote did not innovate well enough and catered to their paid platform owners, Windows and Macs, there were a lot of users who wanted a strikingly delightful way of creating slides. They also wanted it for cheap.
In comes Canva giving you easy and delightful way to build slides on the web, hence becoming platform agnostic. And it offers most of the features for free. Hence it fulfilled all the conditions for disruptive innovation:
The most important qualification of disruption is catering to a market that is not in the focus on the incumbents. Canva catered to the novice and non paying segments, who wanted a tool for free. It was from this pool of free users where people who loved and wanted more paid for the product.
Second criteria is a relatively cheaper price. Canva is cheaper than the incumbent - free in most case.
The third criteria also holds true here, which is being a mediocre version of the incumbent player. Canva is not a full fledged presentation software. It is sparse in its feature set and compensates the lack of features with ease of use.
The most obvious second example that I am sure all you must be knowing already is Notion. Notion is a collaboration tool for teams in a post file, post MS Office world and it has had a phenomenal growth story.
Notion too has had a meteoric rise and product adoption has massively increased over the years.
The first launch of Notion supported the following features:
Drag-and-drop, Kanban-style to-do lists
Wikis and internal documentation
More than 30 document templates
The best use case to compete with Atlassian was Wikis.
Early adopters of Notion were pleased. Notion could handle a robust array of tasks, and looked and felt great to use. The product’s drag-and-drop functionality made editing and organization easy.
Notion fulfilled all the conditions of disruptive innovations:
It catered to a new segment of novice users/software engineers for whom Confluence was quite intimidating and impractical. These users did not need a feature factory like Atlassian.
It was a mediocre product when compared the incumbent Atlassian. It didn’t excel as any one particular task even though it was quite feature rich.
Notion was much cheaper that fulfilled the second condition.
Do let me know if you have examples of disruptive innovation around you.
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