Big-Bang Disruption

In recent years a new--disquieting--form of disruptive innovation has emerged. It doesn't follow Clayton Christensen's classic model, entering the market as a cheap substitute to a high-end product and then gradually increasing in quality and moving up the customer chain. Instead, the innovation beats incumbents on both price and quality right from the start and quickly sweeps through every customer segment. This kind of "big bang" disruption can devastate entire product lines virtually overnight. Look at the effect that free navigation apps, preloaded on smartphones, had on the market for devices made by TomTom, Garmin, and Magellan. Big-bang disruptions often come out of the blue from people who aren't your traditional competitors. Frequently, they're developed by inventors who are just doing low-cost experiments with existing technologies to see what new products they can dream up. Once launched, these innovations don't adhere to conventional strategic paths or normal patterns of market adoption. That makes them incredibly hard to combat. The authors, who've spent 15 years studying marketplace disruptions, offer some strategic principles to help businesses survive big bangs: Be on the watch for failed experiments that could signal that a big bang is brewing in your industry. Find ways to slow the disruptive innovation down and to leverage your surviving assets in another business. These assets will usually be intangible; other kinds of assets generally lose value quickly after a big bang and must be shed quickly. Diversifying into new kinds of business will protect your company. Though technology- and information-intensive firms are most vulnerable to big bangs, mature industries face this threat, too. Credit cards, automobiles, and education, for instance, are all experiencing early warning signs. But in every industry, big-bang disruption will be keeping executives in a cold sweat for a long time to come.

• Competitive strategy
• Disruptive innovation
• Digital transformation
• Marketing