Disruptive Innovation: The Practical Benefits Behind the Science

Today’s business vocabulary includes several words and phrases that people tend to use to sound cooler than they actually are. Think of tech-savvy, digital transformation and perhaps the most famous of them all: disruptive innovation. The term disruptive innovation seems to be thrown around whenever someone speaks of the slightest shake up in business, but people please, you are better than this. Let’s set some things straight and explain to you why you better start getting on top of your vocab.

Let’s Freshen Up: What Is Disruption ?
The theory of disruptive innovation was introduced in the 90’s by Harvard professor Clayton M. Christensen, outlining that disruption occurs when a smaller company with fewer resources successfully challenges an established business. This knowledgeable fellow is considered the disruptive innovation guru and to be fair, we can see why.

“Once the product or service is of equal or higher quality than how the bIg guys used to do it, basically any customer from any segment will gladly switch to the cheaper version.”

So, what Christensen means in normal English, more or less, is that disruption can occur in two ways. 

Option one is  that truly disruptive startups (mostly) first serve smaller, more price conscious customer segments, the so called low-end of a market.
At this stage they are not taken seriously by the traditional companies which provides the startups with space to experiment and develop the best possible version of the product or service. Once the product or service is of equal or higher quality than how the big guys used to do it, basically any customer from any segment will gladly switch to the cheaper version. Naturally, this version is likely to be provided by the start-up. Consequently, user volumes will skyrocket and voilà, disruption will take place. 

Option two is that disruptors create entirely new markets.
This means that they make consumers want to do or have things that the consumers did not even realize they wanted. Like what? Well, the PC might be the most straightforward example. Your grandma did not know she wanted one, but look who is your biggest Facebook fan now!

Sounds easy, right? Well, it is not. It is all very complicated because theories from Harvard professors usually are. If you are interested in the science behind the complexities of disruptive innovation, we suggest you Google this Christensen guy and get your reading glasses out. If you are the efficient type of person we suggest you focus on the practical benefits of understanding the essence of disruptive innovation.

Benefit 1: Understanding Disruption Keeps You Awake
As a business owner, knowing how to spot a disruptive innovation could prevent pretty nasty stuff, especially if you are among the originals in the business. Let’s imagine a universe where the Marriotts and Hiltons of the hospitality industry would not have laughed at Brian Chesky explaining how he put air mattresses in his San Francisco apartment to welcome strangers in to his flat. While those luxury chains were busy filling minibars and putting chocolates on their customers’ pillows, Chesky managed to build a company you might have heard of, called Airbnb. Airbnb disrupted the travel industry and Chesky, being the CEO, is now worth a modest 3.7 billion USD. We wonder if Marriott and Hilton are still laughing. If they are, they have a great sense of humour. The point is, stay alert folks, stay alert. Do not just mind your own business. 

Benefit 2: Understanding Disruption Makes You Credible
Uber is among the largest disruptors of our Millennial era, right? No, not right. According to our friend Christensen, if you apply the theory correctly, you will learn that Uber is not so disruptive after all. Uber did not come from a low end of the market neither did it create an entirely new market. Instead, it started targeting the normal folks who were already using taxi services. This does not mean that Uber is not innovative, though. Uber surely is. But an innovation is not necessarily disruptive. Whether any disruption is innovative? That we will let you figure out by yourself. Being able to have discussions about these kinds of questions with people that matter, will make you a whole lot more credible than randomly shouting “disruption” every half a minute.

Benefit 3: Understanding Disruption To Protect Your Image
Aspiring to become a disruptor? Let’s face it, being able to call your company a disruptor would be pretty awesome. However, the image of disruption is starting to change rapidly now. The term “disruption” has become its own biggest enemy, as it has become so mainstream that people might have trouble taking you seriously. Remember when your college teachers told you to think outside the box? Right, chances are you feel an urge to vomit whenever you hear someone talking about that box now. Perhaps this fate is awaiting disruptive innovation too. Those are things to consider before you label your company.

Got different ideas? Feel free to share them!  

About Amstel Lab
Amstel Lab partners with start-ups and scale-ups to commercialize your business. On the back of our experience, we have developed the unique Amstel Lab method: a tailor-made approach to maximize success. We test your markets, refine your product, innovate your commercial approach and execute your strategies. Any good idea is worth seeing through.

Want to learn more? Contact us through [email protected]

10 Ways to Distinguish an Entrepreneur From a Tourist in Amsterdam

You might have noticed that Amsterdam’s streets have become rather crowded. Sure, it is largely due to tourists trying to get run over by beautiful Dutch girls on beautiful Dutch bikes, but there seems to be an other group of people on the rise: The Entrepreneurs.  There is a common belief that entrepreneurs are society’s daredevils with enough balls to follow their dreams, give up their boring corporate careers and create cool jobs in even cooler places. They are the ones brave enough to trust their guts and to wear swim shorts to work. After all, it is summer in Amsterdam and in this city we do not know what AC is.

But what characterizes successful entrepreneurs? How do you recognize this interesting species in this city packed with international visitors? Here’s a guide to distinguishing Amsterdam’s entrepreneurs from its tourists.

1. They Are Eager to Know the Unknown
Entrepreneurs seem to be more open to new experiences than normal folks. Tourists are too, of course, but then again entrepreneurs will probably have something better to do than queueing for the Heineken Experience on a random, rainy Sunday. They are curious at heart, open to a wide array of perspectives and they are willing to take risks. 

2. They Take Responsibility
Entrepreneurs seem to believe that only they are in control of their own fate. This implies that they understand that important outcomes related to success or failure are the direct result of their own actions. In other words, they take responsibility and do not hold their environments accountable for any potential problems that arise.

 

 

3.  They Are Creative
Even without mushrooms, the entrepreneurs can get the imaginary parts of their brains pumping. Regardless of the industry, the true entrepreneurs will be driven by their creative forces. It is about the ability of the brain to generate concepts that uncreative people call “out of the box”. Been there, done that.

4. They Might Persuade You to Do Things
Bringing their ideas to life involves persuading other people. Investors and co-workers require a certain dose of persuasion from time to time.

5. They Help Each Other Out
Although the Amsterdam start-up scene is quite large, the city is still small and so are its co-working desks.  As such, chances are, entrepreneurs accidentally spill 



coffee on fellow entrepreneurs’ desks/shirts/computers and get to know each other in the process; the perks of discomfort. Naturally, this provides for a great opportunity to share knowledge and expertise, which is also stimulated through concepts like Meet-Ups or Seats2Meet.

6. They Have High Self-Esteem
High levels of self-esteem are likely to be found in successful entrepreneurs. This means that entrepreneurs often feel capable and comfortable handling various situations and people. And if they do not, they know how to mask it. Chin up, shoulders back; they know how to power pose.

7.  They Are Extremely Direct
The Dutch are known to be rather blunt and honest people in general and the entrepreneurs tend to reinforce this stigma. No shit Sherlock, welcome to The Netherlands.

8. They Do Not Walk On the Bicycle Lane
No they do not. As opposed to tourists, Amsterdam’s entrepreneurs actually cycle on them to get to those cool offices, co-working spaces, you name it. Did you know that cycling is a great way to keep the brain healthy as pedalling increases the brain’s ability to grow and restore itself?

9. They Do Not Carry a Selfie Stick
Instead, entrepreneurs carry a notepad, occasionally a MacBook and a secretive smile.

10. They Are Achievement-Driven
Google any entrepreneur and the first thing you will find is some award he/she has won. Why? They love  to win and will go out of their way to enable the right SEO so that you will find out about it.

At the end of the day, it is all about synergy. It is a matter of moving forward, of going places in an efficient, Dutch way. Tourists and entrepreneurs will continue to dominate the city streets of Amsterdam, some on the bike and some underneath the bike. What a lovely city, is it not?

Missing anything? Feel free to add on! 

About Amstel Lab
Amstel Lab partners with startups and scaleups to commercialize your business. On the back of our experience, we have developed the unique Amstel Lab method: a tailor-made approach to maximize success. We test your markets, refine your product, innovate your commercial approach and execute your strategies. Any good idea is worth seeing through.

Want to learn more? Contact us through [email protected]