Posted: 4:25 p.m. Tuesday, Jan. 7, 2014
By Issie Lapowsky
A new book explains the traits that instant disruptors have in common and what you can learn from them.
The word "disrupt" (and its many forms) has become the tech world's ultimate cliché. With the right amount of PR spin, any new technology can be passed off as disruptive. Usually the word evokes little more than an eye-roll from those in the know. And yet sometimes, it just fits.
Companies like Uber, the ride-sharing app, and Aereo, the television streaming company, have been embattled from the outset for their potential to disrupt how their industry's establishment operates. Others like Instagram and Snapchat have commanded enormous valuations simply because incumbents are afraid they'll disrupt their user base.
What's unique about these disruptive technologies is that they don't require a tremendous amount of research and development, they're very good almost from the start, and they're able to capture a mainstream audience practically overnight.
In their latest book, business writers Larry Downes and Paul Nunes refer to this phenomenon as "big bang disruption."
"In the past you had traditional innovation, which was better, but it cost more. You could also be cheaper and not as good, but get a little better over time," says Nunes. "What's different now is the ability to be better and cheaper, simultaneously."
By analyzing research from the Accenture Institute for High Performance and conducting interviews with entrepreneurs and investors, the authors found a number of characteristics that big bang disruptors have in common. They turned what they learned into Big Bang Disruption, a playbook of sorts for entrepreneurs. Here, seven rules for becoming the next big thing:
1. Listen to truth tellers.
In soap operas, the so-called truth teller is the character who moves the story along and tells the audience where the plot is going. Every business needs one. They come in all shapes and sizes, from eccentric visionaries like Steve Jobs and Elon Musk, who latch onto a dream of the future with relentless persistence, to young employees who have moved from one successful startup to the next because they have an eye for promising future technologies. "There are all these truths," says Nunes, "but they're not necessarily obvious, except to the people whose lives depend on it."
It's not always people who are truth tellers, however. As Downes points out, these days, data sets and crowdfunding campaigns can go a long way toward indicating market demand. "The thing about this rule is that it's not always hard to find the truth," he says. "Listening to it is the hard part. Often the truth is very unpleasant. You don't want to hear your 100-year-old market-dominant product that's a cash cow is going to die." And yet, heeding advice you don't want to hear is the only way to stay ahead of the curve.
2. Perfect your timing.
It's easy to think that good timing is simply a matter of luck, but Downes and Nunes found that luck plays only a small role. To illustrate this point, they used the example of Amazon's Kindle. It wasn't the first e-reader on the market. Far from it. But it was the best, because Jeff Bezos spent seven years waiting for the technology to mature to avoid problems the Kindle's predecessors had encountered. Studying why others have failed, Downes says, is key to any big bang distruptor's success. "You're trying as a strategist to minimize how dependent you are on luck," he says.
It's a mistake, Nunes says, to assume that being first to market is best these days. The early-to-market advantage seems to be a thing of the past. "A lot of the advantage goes to those who can execute when the market is ready," he says.
3. Experiment often.
It used to be that the company with the biggest R&D department developed the most innovative new products. While those days aren't totally gone--Google still churns out plenty of hits--gigantic budgets are no longer required to conduct small experiments that could turn into massively disruptive ideas, the authors say.
Hackathons are a great way to experiment on the cheap. "Give away money and carbs, bring developers in, and see what they can come up with in 48 hours," says Downes. Twitter, for example, was born out of a hackathon at Odeo, Evan Williams's podcasting startup. "They launched it to say let's see what happens. It took on a life of its own," says Downes. "The cost of experimenting gets cheaper all the time. The risk of experimenting is getting very low as well."
4. Survive catastrophic success.
No, that's not an oxymoron. Becoming successful beyond your wildest dreams is a fortunate challenge to have, but a challenge nonetheless. "If you do create the better mousetrap," Nunes says, "you'd better be prepared for the world the beat a path to your door." Otherwise, you could fall victim to your own logistical bottlenecks and lose customers.
Luckily, the authors say, it's easier than ever to find partners ahead of time that will help business owners ramp up capacity when they need it. The answer is outsourcing. "It's much easier to rent the scale when you need it and de-escalate when you don't," Downes says.
5. Anticipate saturation.
Being a big bang disruptor doesn't end with the initial catastrophic success stage. Even the most disruptive businesses have to fight hard not to become the stodgy incumbents they once overthrew. One major part of that fight is realizing that your product, like all products before it, has a saturation point.
Zygna, for example, was clearly attracted to the meteoric growth of OMGPOP's Draw Something app when it acquired the company for $180 million. But Zynga failed to notice that Draw Something was about to hit a saturation point. Its user base peaked just a few days after the acquisition, and continued to fall almost as quickly as it had grown.
6. Shed assets before they become liabilities.
To continue their success, big bang disruptors need to be planning their next hit before their first flames out. "When the end comes, it comes very fast," says Downes. "If you're waiting until things start to slow down before you think about what you'll do next, that's a recipe for disaster."
With social media and a 24-hour news cycle, information is disseminated more quickly than ever. That means, Downes and Nunes write, that the majority of the consumers who will ever use a product will use it right away. "There's no market for stragglers who will show up later anymore," says Nunes.
That's why it's critical not to devote all your resources to a single breakthrough product. Either start to reduce expenses early or begin using them to develop your next big hit.
7. Quit while you're ahead.
No matter how clear your vision, how perfect your timing, and how careful your strategic planning, at some point even as a big bang disruptor you are susceptible to disruption yourself. To stay alive, it's critical to anticipate those threats, realize that your once-novel innovation is slowing you down, and have the guts to cut the cord.
Philips, for instance, was a pioneer of incandescent lighting. But when its leadership team saw that LEDs were the way of the future, they preemptively announced they'd be shutting down their incandescent lighting division to focus on LEDs. They also urged other countries to mandate a phaseout of incandescent lights. In doing so, Philips, a 123-year old company, became a disruptor all over again.
"It saved Philips from investing in all kinds of expensive ways of trying to salvage the old business," says Nunes. "So many businesses and industries refuse to exit and wind up [pouring] enormous parts of residual profits back into an industry they're trying to save."
For advice on how to avoid being derailed by a big bang disruptor, check out Inc.'s earlier interview with Downes and Nunes.