Self-Disruption: A strategy company can adopt to avoid Disruptive Innovation and Big Bang Disruption
Innovation is a change and improvement over the existing technology. Our curiosity about doing something new leads to innovation, and it is the key to all the technological advancement we have been experiencing today since the Stone Age. As a consumer, we always embrace innovation because it brings simplicity and improvements, but as a company, we perceive innovation as a threat and name it ‘disruptive innovation’ or ‘big bang disruption’ if it takes over the existing market. We should not expect innovation to be stationary.
Innovation is a cycle, just like nature. It destructs the old, creates the new, and the cycle continues. This is why most of the companies who were once in fortune 500 don’t even exist today. Why IT and Tech companies are prone to such disruptions? Because the business environment is highly ambiguous, everyone is trying to innovate something that will eventually lead to either disruptive innovation or big-bang disruption. The main difference in these two is that disruptive innovation gives some time to the company for either acquisition or adoption, but big-bang disruption is uncertain and abrupt.
The current strategy adopted by companies for innovation is not able to sustain these disruptions. Companies are investing their time in augmenting and digitalizing different aspects of the existing product. But for true innovation, companies must adopt the strategy of self-disruption. It is a concept of becoming your own competitor. Instead of waiting for any other Internet company to take down Netflix’s business, it self-destructs its DVD rental service by adopting the on-demand streaming model. Amazon self-disrupted its physical book business by introducing the Kindle, but profit is still in Amazon’s pocket.
Self-disruption can be explained as launching an innovative product that disrupts company’s existing product. Apple, Google, Microsoft, and other giant IT companies also use the same strategy to rule out any possibility of outside innovation taking down their market. Google also created Google Plus by disrupting Orkut instead of augmenting it. Thus self-disruption not only avoids the threat of disruptive innovation and big-bang disruption but also maintains the continuous cycle of innovation within the company.
Self-disruption can be combined with strategies like acquisition and adoption, which are mainly used by companies to sustain disruptive innovation. Take Facebook as an example. It acquired WhatsApp and Instagram because they were affecting the market dominance of Facebook over social media. But after the acquisition, it did not integrate them into Facebook. They are running as an independent service and might distract customers from Facebook, but the overall revenue will remain the same. Keeping them standalone will also give competition to services like them.
A company must perform iterations to its products and services in every section of market adoption. Still, it should start seeking opportunities continuously for self-disruption when adoption reaches the late majority section regardless of the profit it is making. If the company will not self-disrupt, another company will disrupt it. Netflix used self-disruption for innovation, even when it was successful and making a profit. Companies should focus on every aspect of product or service innovation. This includes transformation or integration in different platforms, changing the business and revenue model, changing technology, or many other possibilities. But self-disruption may be critical, as risk is always there with it like in any innovation.
While seeking an opportunity for self-disruption, a company should keep an eye on market activities and its capabilities. They must be able to predict how any new technology can affect their existing product. Companies should not immediately discontinue the disrupted product. They should wait for the majority to adopt the new product. Like Amazon did not stop selling physical books after introducing Kindle and Apple did not discontinue its iPod, even all its features are present in the iPhone. Once an innovation gets established and adopted by the majority, the innovation cycle needs to be continued.