In 1995, Clayton Christensen, a professor at Harvard University, coined the term disruptive innovation. He was inspired by the idea of “creative destruction” that had been created by Austrian economist Joseph Schumpeter, who used it to explain business cycles. Clayton predicted what would happen two decades later: the steady advance of disruptive technology-related innovation.
Christensen came to the conclusion that the functioning of capitalism happens in cycles and that every industrial or technological innovation eliminates the previous one and comes to dominate the market. If we look at companies that currently dominate areas that have already been monopolized by others, such as Netflix in relation to Blockbuster, we come to the conclusion that Clayton’s theory is being massively proven.
Want to better understand what disruptive innovation is, know its importance, and know success cases? Keep reading!
After all, what is disruptive innovation?
Contrary to what many people can imagine, disruptive innovation is not synonymous with modernity or pure and simple innovation. As its name suggests, it is something that breaks with normality, that is, that changes a pre-established paradigm.
Disruptive innovation happens when a product or service creates a new market and destabilizes competition to the point of taking its place as top of mind. It is not necessary to reinvent the wheel, just find a simpler or cheaper way to offer a product or service, or reach an audience that did not have access to an area that was restricted.
In this scenario, companies start with a modest customer base, until there comes a point where an entire segment wins.
What are the success stories in disruptive innovation?
To facilitate their understanding of disruptive innovation, we go to practical cases of companies that have managed to snare markets that were considered consolidated. Here are some success stories:
- Wikipedia — eliminated the need for printed encyclopedias such as Barsa;
- Uber and 99Taxis — popularized car travel and gained a huge market share that was a monopoly for taxi drivers;
- Netflix — started as a home DVD delivery company and saw potential in streaming distribution, ending Blockbuster’s failed monopoly;
- Google — with a simple search in search engine we get any answer we need, eliminating the need for printed guides and phone books;
- Nubank — the company saw an opportunity and offered an app-controlled, no-annuity-controlled credit card;
- Spotify — has reborn the music distribution, which has been powerless for nearly a decade with piracy.
See a success story from one of Kazap’s partners
Disruptive innovation is not exclusive to international companies of global reach, Brazilian startups have been looking for new ways to deliver products and services that align with the new reality.
For example, Kakau, an insurance startup, broke with two traditional paradigms on its platform. First, offering, in addition to residential insurance, protection for items of considerable added value, which are unfortunately much targeted by criminals in large cities, such as smartphones and bicycles. Second, coming out of the traditional model of insurance sales with long-term loyalty contracts, offering monthly subscriptions, which can be cancelled when the user wants.
Going further, the company offers a plan with 24-hour assistance for bicycles, adding more value to the service and meeting another basic need of users. Thus, by thinking outside the traditional model, researching the target audience, and integrating technologies, Kakau places itself as a company that is always ready to respond to the needs of the market with agility and innovation.
Kazap assisted Kakau in this process by helping to rethink integration with payment gateways, focusing on the monthly subscription model. We developed the entire sales platform and internal controls that served as the basis for this innovation.
How to take the first steps to disruptive innovation?
There is no magic formula for a company to develop a product or service that achieves disruptive innovation, but changing organizational culture can accelerate this process. It is necessary that the team have a keen look and start to see the market and customers, always looking for opportunities and not just in search of sales.
A product or service that presents disruptive innovation has the following characteristics:
- it needs to be essential, offering the customer something new that the competition has not yet seen, so that the company is no longer one more in the sector and becomes essential;
- must have its own identity, that is, it is no use copying a successful company, and it is necessary to create its own history;
- make a good planning, which involves mapping the market, knowing how to deliver the product or service and estimating the return.
We hope that with the reading of this post, you have understood what disruptive innovation is and how this concept can change a level company. Digital transformation is here to stay and some companies have already begun to consolidate at this new time, in several different areas. The sooner you start this search, the better the chances of finding your differential and dominating the market, who knows until the next revolution.
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