Entrepreneurship is full of terms and expressions. And one of the most absorbed by the business world was the concept of disruptive innovation, mainly for disruptive startups.
Arguably, competing in an increasingly dynamic and technological market requires innovative actions almost constantly. However, there are different ways to innovate.
Artificial intelligence, e-commerce, cloud computing, social networking, the internet of things, 5G, blockchain, and other emerging technologies are creating new business models.
Popularized in 1997, disruptive innovation has become one of the most important concepts for many great 21st century entrepreneurs for startups.
In this article, you will understand what means disruptive innovation and its role for disruptive startups that make their way to change the business world.
What Is Disruptive Innovation?
As companies gain market share, they segment their audience. Thus, to ensure ever-greater profit margins, organizations seek to satisfy their demand. It optimizes processes and reaches the front of their niche.
From there, incremental innovation has purpose and direction. Especially when the company invests resources in research on the consumption habits of its customers.
What happens is that a portion of consumers either does not have access to the products and services offered by the company. Or they are not relevant enough to drive their innovations.
Thus, there is a situation that configures a repressed demand for a business model. Realize that this is not necessarily an inaccessible product or service. But a model that prioritizes the maintenance of the organization’s standards about its consumer market.
Disruptive innovation is a gradual process, with a series of incremental innovations by the startup, which eventually disrupts the current market. Hence the term “disruptive”: what was once a successful business system will have to be discontinued.
Disruptive Startups: paths to change the world
Startups, technology-based companies, usually act with innovation. Every startup must always think about how technology can solve problems for a certain part of society.
To be elevated to a prominent position, however, it is necessary to go beyond everyday innovation. It is necessary to move towards disruption. Being disruptive is creating entirely new ways to meet a need.
It requires a lot of attention to the problems facing the world and the market opportunities, research, dedication, but, above all, having the right timing.
Often, an original idea with disruptive potential is no longer so because its creator took too long to put it into practice, and someone else thought the same and passed it on.
What are the paths of Disruption?
With a better understanding of what disruptive innovation is, we can move forward and understand what paths to take. Disruptive models are emerging quickly in the startup ecosystem and their entrepreneurs, in addition to creativity, passion, use the concept of Lean Startup.
To experiment
From the moment an idea or a business vision arises, you create your hypotheses. However, you do not initially know whether your hypotheses are true or false.
The purpose of these tests is to try and validate what is true and what is false, in other words, you validate the acceptance of your product or service by your target audience. Starting from this principle, you will discover how to develop a sustainable business around your idea or vision.
To Test and Measure
Assuming that you have already validated your idea empirically, talking to your audience, simulating, and experimenting with your proposal, you can start a more effective test.
At this point, you may consider creating an initial version of your product or service, such as MVP.
A good MVP must follow a fast path, which simply brings features. And, above all, it helps in the build-measure-learn process. A way to get feedback with the least effort possible.
To Pivot
During the process of building a new business, there are countless doubts, challenges, and especially feedback from the market on how your product or service is satisfying or solving a major problem for it. For this reason, measuring is essential to be able to make more assertive decisions for your strategy.
The term Pivot is very common among entrepreneurs, however, it is a dilemma knowing when to Pivot or Persevere.
We can consider pivoting as a correction of the course of the business, in a structured way, designed to test a fundamental new hypothesis of the strategy and its growth engine.
Opportunities for Startups
Lean Startup concepts are deeply embedded in the business models developed by startups. They are concepts that I talk about daily in my interaction and mentoring with entrepreneurs. However, there is a movement, even if still very frightened, businesses that are already structured are beginning to understand these concepts.
However, there are other ways to bring disruptive or even incremental innovation to companies through startups. Some companies are investing in or partnering with startups, usually when the solutions are related to their business.
These companies make their channels, customer base, support, and even money available, but without the need to create a structure for this.
The benefits and challenges
The benefits for companies are numerous, being able to benefit from solutions or businesses developed for the company itself. As well as obtaining information and knowledge from its customers and consumers who do not reach the company through their traditional businesses.
Finally, it is noteworthy that both entrepreneurs and companies need to understand cultural and process differences. Companies need to create an agile decision-making process, understand and adapt to the profile of these entrepreneurs.
And be willing to take risks, for, on the other hand, entrepreneurs need to understand how the corporate world works. Also, understand their ability to adapt, and know how to deal with adversity. With this everyone wins, especially the customers and consumers of these businesses.
Finally, disruptive innovation is directly related to the ability to align efforts to create value and drive growth.
Examples of disruptive innovation for startups and companies
Some several businesses and activities started with the thought of breaking some market patterns. Startups are great examples of organizations that adopt this methodology and use it to support their actions.
The emergence of digital banks and fintech specialized in this service opened a new window on the market. These organizations redefined the concept of the financial institution and forced large banks to follow this trend.
It is easy to think about how this phenomenon is being applied and how it has been applied in several other segments. Companies like Netflix, Airbnb, and Waze are examples of organizations that have changed the way the market consumes products and services.
How to control the risk of disruptive innovation
Disruptive innovation is a process that must cover almost all segments. This happens because there is a need to create simpler, more accessible, and cheaper ways to interact with users.
However, studies and research on the behavior of users and consumers are necessary for the transformation to be compatible with these needs. This process is essential to avoid creating innovations that break patterns, but that does not effectively transform people’s lives.
What is the impact of disruptive startups innovation on the market
Disruptive innovation is one of the pillars for creating solutions to problems that were conventional in society and the market. This movement is responsible for creating new markets and making others old.
Therefore, you can understand this process as fundamental for shaping and thinking about current and future consumption and market. Thinking about new products and new services involves thinking about meeting people’s needs. With no standards established in various sectors.
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