Is Disruption the Most Important Model for Innovation?

The theory of “Disruptive Innovation” is an idea that has come to dominate business. Why? Business pundits and consultants would tell us it points the way to the strongest business success.

Except I think there’s a different truth. The thing the disruption theory does most reliably is give you a great way to sell your business to funding sources, to the press (who LOVE a great disruption story), or to that narrow niche of customers who passionately hate the “old ways” and don’t care if the new way is really any better. The theory of disruption is even being used to sell changes designed for wholesale destruction of our public school system in the US (with an odd leap of faith hoping that whatever replaces it will be better). (More on schools here.)

Using theory to promote an idea isn’t necessarily a bad thing. But truth is important for businesses to succeed. Is there really a strong connection between disruption and long term success? That’s far more tenuous. At least that had been my growing sense of the theory.

And now I see that battle has been joined on exactly this issue. Writer and Harvard American History professor Jill Lepore fired the first shot with an excellent article in The New Yorker (“What the Theory of ‘Distruptive Innovation’ Gets Wrong”).

Responding to Lepore, the forces behind the theory (religion?) of disruption quickly fired back in many places including a rather grumpy interview with disruptive general-in-chief Clayton Christensen (author of “The Innovator’s Dilemma”) which is found here Clayton Christensen Responds to New Yorker Takedown of ‘Disruptive Innovation’.

And I found this really interesting post considering both Ms. Lepore’s article and the Christensen response – Christensen’s Disruptive Innovation After the Lepore Critique.

Please don’t misunderstand. I believe that development and innovation sometimes disrupt markets and competition in surprising and unusual ways. And I believe that, when it happens, it is sometimes, but only sometimes, a very creative force. Yet I find that Ms. Lepore’s article offers solid insights – grounding insights – that bring reality back into the discussion. Specifically:

…Disrupting entrepreneurial efforts are often quite short-lived…and very often end up purchased by the companies they sought to disrupt. Only history and distance can show us this reality.

…Many of the companies which both consultants and Christensen describe as “disruptors” are actually long term market competitors leading the way in discovering innovation.

…Many of the case studies featured in Christensen’s original book which looked like classic entrepreneurial disruption at the time of publishing show a much different truth after 20 years further history.

…Lepore suggests Christensen bases his disruptive theory on “handpicked case studies”. That’s quite a charge – but she offers some good evidence. And if you’ve read Rosenzweig’s “The Halo Effect” you shouldn’t be surprised that yet another highly popular business book is based on very flawed research. (Rosenzweig shows, for example, that neither Tom Peters’ ideas nor “Good to Great” live up to the claim that the ideas are based on solid research.)

What should we take away from all this? Here’s my sense…

1. Disruption does happen.
2. Disruption happens far less often than we are told.
3. In fact, I’ll suggest that out of every 10,000 companies claiming to “disrupt”, only 1 will cause anything that might be called “disruption”.
4. Disruption is often near term with the old industry players dominating in the long run — by learning from (or buying) the disruptors.

So let me consider an area I watch closely – Television. We’re being told that digital endeavors will disrupt TV (usually told this by the companies who hope to disrupt).

But what will really happen in the long run? The truth is that there are digital innovations that have affected cable companies – but no clearly evident disruption so far. (Maybe it would be better to look at online activity to see disruption. For fun, read this post “Online Usage Has Dropped 7 Times Faster Than TV“.)

No competition to cable has established vast strength. And that isn’t after just a few months.

…DirecTV has spent 20 years trying to disrupt cable. And after two decades it’s built a solid business for itself serving a few niches that cable doesn’t want to serve. And cable companies have responded to DirecTV’s competition with services like Comcast’s NFL Redzone.

…TiVO has spent 15 years and failed to be adopted by any of the cable or satellite companies. Those companies have succeeded with far less effective DVR technology bought at far lower prices. (Here are my thoughts on “why”… Latest TiVO Results Illustrate the Impact of Communication Failure.)

…Netflix has been around for 17 years now (yup, founded in 1997) and people talk a lot about them being “disruptors”. Except, it’s a funny thing. They are one of the survivors of disruption. Disruption theory would have had streaming movies put them out of business. Except Netflix sorted out a smart response and survived quite nicely.

…Netflix’s saga continues. Now it’s suggested that they will disrupt cable. The fact is, they merely disrupted the video store. And now they’ve wandered strategically into strangely limited territory with their programming development. If they were to disrupt anything right now it would be HBO rather than Comcast.

So what’s my guess about TV & disruption? In the end, love them or hate them, the cable companies will learn from the disruptors, buy a few (perhaps), and remain the big dogs in the TV business for decades to come. Will they be changed by disruption? Absolutely. And they will change in ways we can’t envision right now. But are Netflix and Amazon about to replace Comcast or Time Warner Cable? I don’t think so.

So the next time some new venture proudly shouts “disruption” in a crowded market…maybe we can all just keep our eyes focused on the job at hand rather than dashing for the exits.

(For related reading… “TV and the Myth of Disruptive Internet Technology“.)

Copyright 2014 – Doug Garnett – All Rights Reserved