How does a small business exploit disruptive innovation?

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I’ve been hearing a lot about disruptive technologies lately … at conferences, from small business owners in the web hosting and web design business and companies seeking business advantage in green products.

We’ve all seen technologies such as microwave ovens, memory storage and the Internet change our world whether as consumers or in businesses.

What exactly are disruptive technologies and how does this term differ from disruptive innovation?

Disruptive technology refers to new technologies that provide better performance than existing technologies or replace them. A simple example is that of seven-single records that were replaced by CDs and then by MP3s.

Disruptive innovation is any innovation whether technological or a business model that leads to the creation of a new market. Another simple example: cars were a technological innovation initially but were expensive and a luxury. But the disruptive innovation came about through mass-production of low-cost vehicles, the Ford Model T being the first, which revolutionised personal transport.

Most businesses are focused on incremental improvements, making existing products better, rather than introducing breakthrough products and services. When these larger businesses introduce their improved products and services, they usually aim at selling to their demanding base of existing customers to keep them. Examples could be high performance cars, higher spec smartphones and photocopiers with fast speeds and print-like quality.

For small businesses, disruptive innovation involves either offering a knocked-down version or lower-priced offering with fewer bells and whistles.  A really simple example is that of small business accounting packages that are low-priced and have the basics compared to enterprise accounting software. Small businesses find opportunities for low-cost disruptive innovation in a niche.

They carry out quick, low-cost, low-resource experiments to determine the most profitable niche to create and attract a new sub-segment of customers. Entrepreneurs  were quick to provide low-cost courier services and independent cell phone repair shops have mushroomed, taking huge volumes of repair work from branded cell phone franchise outlets.

Small business owners wishing to exploit disruptive innovation should watch their customers and talk to them. Observe what they are buying and listen to what they complain about or are talking about. Keep an especially close eye on what they are asking for that you don’t offer. And what they can’t get anywhere else. Look outside your market to see what’s happening in other markets.

Disruptive technologies and disruptive innovation can begin to sound like so much mumbo jumbo from academics who have never run their own business. Besides, disruptive innovation goes beyond what is already being offered on the market. And to complicate things further nobody knows what a disruptive innovation may be until it disrupts.

Instead of watching for trends and trying to find that illusive new disruptive innovation, ask yourself:

What is the best product or service I could ever give my customers?

Or, better still:

What are the greatest pains that my customers are experiencing and how can I take away that pain for them quickly and cheaply?

Whatever answer you come up with could be just as disruptive as any bright and shiny new technology and be way ahead of its time.

Stay inspired

Chesney Bradshaw

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