Let’s give disruption the respect it deserves.
There are so many books with advice on how to startup, run lean, iterate, raise capital, and do more faster. Most of these books are great. Some are exceptional. All of these books contribute to a startup team’s wealth of knowledge and will help the team succeed faster (or fail faster). But, most of the information in almost all of these books — the principles, the processes, and approaches — are anecdotes.
At Techstars they drill into us the notion that, “the plural of anecdote is not ‘data.’” They’re right. There’s nothing wrong with anecdotes. Guy Kawasaki once said something like, “anecdotes can be very useful in the absence of principles rooted in causality because causal based theories and principles usually take a very long time to establish.” So, let’s continue to use anecdotes in the absence of data. Let’s continue to use anecdotes in the absence of causality.
But there is a business management theory that is rooted causality — Disruptive Innovation — and we, as a community, in large part have ignored it. Worse yet, we’ve been diminishing disruption to a feel-good marketing term or casual statement we make about our own startup.
A few weeks ago I got a call from a friend who invests in startups.
“Ruben, this team I’m talking to has a lot of traction, and their idea is fucking nuts! I just know what they’re doing is going to be disruptive.”
So, naturally, I asked him a seemingly innocent question. “How do you know?”
I asked because I wanted to see if he was talking about the marketing version of “disruption” or if he was talking about Disruptive Innovation Theory.
Yes, that’s right! Disruption — this old ass concept — is more than an annual conference, more than an overused marketing term, and more than an identity startups cling to. Disruptive Innovation is one of the few business management theories applied to startups that’s rooted in causality. Not a high-minded woo-woo impractical philosophical theory. Disruptive Innovation Theory has been developed, and scrutinized, and codified over a generation at the direction renowned Harvard Business School professor, and number-one business management leader in the world (two years in a row), Clayton M. Christensen, as a statement of casualty.
Do “A,” “B” will happen. Do “C,” “D” will happen.
Why have we diminished disruption to a trendy term? Why have we not used it as it was intended to be to used; as a step away from the art of starting up and innovating toward the science of starting up and innovating?
So, my friend responded, “What do you mean, ‘how do I know?’? I just know.”
So, I drilled in.
-Tell me about the company. What do they do? What’s the business model?
-Is it cheaper than the existing solution?
-Is it more accessible than the existing solution?
-Is it simpler to use than the existing solution?
-Is it more convenient for people to pull into their lives than the existing solution?
Because Disruptive Innovation theory is rooted in causality, certain criteria must be met for a product/service to be disruptive. A product/service must be cheaper, accessible, simpler and convenient when compared to the existing solution. If it’s not those four things, it won’t be disruptive — period! And here’s the great news… there is absolutely nothing wrong with that. There’s actually a noteworthy process outlined for Sustainable Innovations. It’s an excellent process and just as effective! The only problem is, you won’t sound cool saying “my startup is going to be the next great sustainable innovation.” That sounds pretty lame. I get it. There doesn’t seem to be in glamour around developing sustainable innovations, but you’ll still make a bunch of money doing it. You just won’t disrupt a market.
Okay, now suppose your product/service does meet that criteria for disruption; now what? Well, you’re just getting started. Without boring you with the research and nuances within professor Christensen’s model, further below is a cheat sheet/ checklist you can use.
The absolute worst thing you can do as a startup team is to inaccurately identify your startup’s business model as a disruptive innovation when it’s sustainable, or as a sustainable innovation when it’s disruptive. Both are perfectly fine ways of making money but have two completely — completely — different processes of execution. The startups I’ve personally witness fail or that were left floundering, was because they were so in love with the idea of calling themselves the “next disruptive blah blah blah” and mistakenly taken their startup down the path of disruption when, in fact, their actual business model was that of a sustainable innovation.
Listen (and if you haven’t rolled your eyes yet you’re probably going to roll them now)… Your startup will fail 100% of the time you take it down a sustainable innovation path if it’s disruptive, or if you take it down a disruptive innovation path if it’s sustainable — 100% of the time!
Ask yourself — AND FUCKING BE HONEST! — “does my startup’s business model meet the criteria of a disruptive innovation” (see above)? If so, great! Then continue down the list. As you do, if you find that your startup does not meet one of the indicators adjust accordingly if you truly want to be disruptive. If it doesn’t meet the criteria of disruptive innovations, see my next post on sustainable innovations (or read the Innovator’s Solution).