Disruption as a business strategy

Lots of high-tech companies claim they are disruptive, but what does that really mean?

Whenever a Silicon Valley company has a new product, the founders and backers always claim it's a breakthrough, game-changing technology. But sometimes what they really mean is it's faster or a bit cheaper. Those are good characteristics, but what really makes a product disruptive?

During some recent travel, I decided to crack open Clayton Christensen's book "The Innovator's Solution," a follow-up to his original work "The Innovator's Dilemma." Everyone in Silicon Valley has heard of Clayton Christensen, but I'm not sure everyone has taken his message to heart.

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The key idea in Christensen's work is to distinguish between sustaining innovations and disruptive innovations. Sustaining innovations are those that improve a product to appeal to the most demanding customers. These can be incremental improvements or breakthroughs. A disruptive innovation, on the other hand, is aimed at serving a market of new or less-demanding customers with a product that may be inferior, but simpler to use.

That's pretty close to the strategy we used at MySQL. Rather than compete head on with companies that were a thousand times our size, we focused on the underserved market of Web developers. We decided early on that MySQL would not compete on features; that was a battle we would never win. But we could compete on ease of use, performance, and cost, using a strategy of co-existence rather than replacement. A key element was to serve the underserved; for many developers, MySQL was their first database. Other database companies that tried to "out-Oracle Oracle" largely failed, whether they were open source or not.

Christensen posits a set of questions that act as a litmus test on disruption:

-- Is there a large population of people who historically have not had the money, equipment or skill to do this thing for themselves?

-- Are there customers at the low end of the market who would be happy to purchase a product with less (but good enough) performance if they could get it at a lower price?

-- Is the innovation disruptive to all of the significant incumbents in the industry?

There are plenty of successful businesses that are not disruptive. But if you are taking on companies that are a hundred or a thousand times your size, you've got to have some reason to believe that the competition can't crush you. A disruptive company uses a strategy that cannot be emulated by the incumbent lest they destroy their core business.

As a reminder, I'll be at OSCON in San Jose later this week speaking on a panel about the true cost of open source, something that can be profoundly disruptive -- in the right situation.

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