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Disruptive is the New Norm

July 3rd 2015

Clayton may not be the best known business guru but he has the academic credentials together with real industry experience.  In “Innovator’s Dilemma” his central theme was that companies put too much time and effort on fulfilling customers’ needs today without innovating new ways to satisfy future needs – whether these needs are recognised or not.  It’s not a new philosophy – Henry Ford is famously (allegedly) said in 1908 “If I’d asked people what they wanted they would have said faster horses”.

The problem is however that truly insightful and disruptive businesses still seem to have a higher than expected failure rate.  After all, if they managed to work out what people really want today and tomorrow and know how to deliver it, aren’t they bound to succeed?

The answer is “no” of course.  There are lots of other business environment, team, competition, regulatory and other reasons for failure.  However, recent evidence from Harvard Business School sheds more light.

In the “Five Stages of Disruption Denial” Grant McKraken talks about the reasons for disruptive services not to succeed – he calls them five stages of grief.  These include Confusion (“this first versions is really too clunky to work”), Repudiation (“how can I do anything useful with 140 text characters on a phone?”), Shaming (“This Twitter thing is just a fad and in a few weeks it will go away”), Forgetting (“Yeah I heard about it but I’ve moved on now”) and finally Acceptance (“Yep, had it a while now”).

What’s really coming out here is the question of timescale.  Back in Henry Ford’s day, it could take 10 years for a disruptive technical revolution to take hold.  That gave companies time to bring people with them.  Now the market is much more fickle.  And recent history is littered with examples of disruptive businesses that were just too early – Betamx, Myspace, Palm and even YouTube.  And who remembers the Apple Newton?

The fact is, as investors we like to look for high returns over a short timescale – the meteoric growth of a disruptive business that takes an established market by storm.  In reality, being too early is just as bad as being too late.  It’s therefore those businesses that have been around for a little while, but are able to pivot at just the right time, that seem to enjoy the best chances of success.

Perhaps we’d be best remembering caustic author Seth Godin when he said “it takes about six years of hard work to become an overnight success.”

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