But first, the origin of the term disruptive technology
First, disruptive products are simpler and cheaper; they generally promise lower margins, not greater profits. Second, disruptive technologies typically are first commercialized in emerging or insignificant markets. And third, leading firms’ most profitable customers generally don’t want, and indeed initially can’t use, products based on disruptive technologies.” – Clayton M. Christensen, The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (1997)
As the above graph shows, disruptive technologies cause problems because they do not initially satisfy the demands of even the high end of the market. Because of that, large companies choose to overlook disruptive technologies until they become more attractive profit-wise. Disruptive technologies, however, eventually surpass sustaining technologies in satisfying market demand with lower costs.
Therefore, the launch of disruptive technologies is mostly based on “focus strategy” which is one of the three generic strategies for outperforming other firms in the industry (by Michael Porter).
Success breeds success
Focus strategy is focusing on a particular buyer group. It is built around serving a particular target very well and each functional policy is developed with that in mind. It is likely that a firm can serve its strategic target market more effectively from its competitors. And hence may earn above-average returns for its industry.
For example, EV vehicles were launched with keeping the needs of the younger generation, who were environmentally conscious, and wanted better customer experiences. And then with the developments to reduce battery costs it was mass marketed.
Ending the War between Sales and Marketing
If your market is customized, a combination of strong marketing abilities and strong cooperation from sales channels are common organizational requirements. Integrate teams by having them share performance metrics. Integrate activities such as planning, target setting, customer assessment and value proposition development.
Many companies are appointing a chief revenue (or customer) officer for this purpose.
Picking the Battleground
Assuming that the competitors will fight back to a firm’s moves, be strategic in selecting the best battleground for the war with the competitors. Make sure its a market segment or strategy in which the competition has vulnerabilities. The legacy of their past and present strategy may make them frozen.
The music industry is still recovering from physical albums being wiped out to digital singles and downloads. The legacy players were not able to retaliate in time to moves of digital streaming and downloads players.
To outcompete through disruption, it is important to rise so quickly that larger competitors overlook the incumbents. They are not initially competing for the same customers, so the big guns brush them off.