Disruption / innovation
and its influence in or on companies
Disruption is a term we hear again and again in connection with the introduction of digital business models. But are we actually clear on what exactly it means?
Definition: what is disruption?
The word “disruption” is derived from the English “to disrupt”, which in German means to disturb, divide, tear apart. The term comes from business and describes a process in which an entire market is replaced or “shattered” by a rapidly growing innovation. This means that existing, traditional business models, products, services or even technologies are replaced by disruptive innovations and in some cases even completely displaced.
No business area is completely safe from disruption, but in the context of digital transformation, the term “disruption” has become increasingly important.
What are the types of disruption?
There are different types of disruption that can occur in the business world. Here are some of the main types of disruption with examples:
Technological Disruption: this type of disruption occurs when a new technology or innovations make existing products or services obsolete. An example is the introduction of smartphones, which have made traditional landline telephony obsolete.
Market disruption: this type of disruption occurs when a new company enters the market and challenges existing companies by offering a better product or service at a lower price. An example of this is the disruption of the cab industry by companies such as Uber or Lyft.
Business model disruption: this type of disruption occurs when a company introduces a completely new business model that can make existing business models obsolete. An example of this is the disruption of the music industry by online music streaming services such as Spotify or Apple Music.
Process disruption: This type of disruption occurs when a company introduces new processes that improve or replace existing business processes. An example of this is the automation of production processes through robotics and artificial intelligence or the automation of document processes.
Innovation vs. disruptive innovation
In addition to disruption, there is also “normal” innovation. You could also say that innovation has two faces – one evolutionary/incremental and one disruptive. Innovation and disruptive innovation can be distinguished by their impact, target audience, business model and development time.
Let’s illustrate this with a comparison:
|Type of change
|Improvement or extension of an
existing product / service
|completely new technology or a completely new business model, which can make existing products / services obsolete
|Market acceptance/ target group
|The aim is to better serve existing customer demand and to satisfy existing customers
|The aim is to open up new customer segments, under certain circumstances you may lose existing customers
|Impact on the market
|has limited market impact and often
leads to incremental improvements
|has the potential to revolutionize an entire industry and displace existing companies
|It is part of the existing business model
and can help increase success.
|It can completely turn a company’s existing business model upside down, forcing it to redesign its strategy, resources and processes.
|Time of launch / development time
|It is usually developed based on customer feedback and market research, which
can also be relatively launched.
|It often has a long development time and often requires a high level of investment before it can be brought to market.
No company is safe from disruption
Innovations that break up or completely replace existing structures in companies or in economic sectors have not only existed since start-ups were “en vogue”. However, due to ongoing digitization, we are now experiencing more and more upheavals, which often happen even faster. Every company, no matter how successful, can/will be threatened by a disruptive innovation at some point. For this reason, it is important to constantly develop and digitize processes.