Paul Nunes and Larry Downes recently wrote a book entitled “Big Bang Disruption: Strategy in the Age of Devastating Innovation” and hosted a webinar through Harvard Business Review about their book. I haven’t read the book – yet – but the webinar gave a good synopsis of what to expect.
Before I write about what they said, I need to give a little background information about business disruptions. In the late 1990s, Clayton Christensen developed the concept of Disruptive Innovation where new companies would get a foothold in an industry by creating cheaper, not-as-good-as-the-original versions of an existing product to appeal to the bottom end of a market. Then they would make subsequent improvements that surpassed current products, thus disrupting an industry. The computing industry is a great example of this concept. When computers were first made, they were large and very expensive. Only big companies could afford them. Then the personal computer was developed. It wasn’t as fast or as good but an individual could buy one. The mainframe companies were happy to let the entrants serve the individual consumer and didn’t see the personal computer companies as a threat. Over time, the personal computer companies improved their products to the point that mainframes became obsolete.
Nunes and Downes position their research and book as the new wave of disruption that doesn’t require starting with a cheaper, not-as-good-as-the-original version. In fact, they argue that disruptions nowadays are with products that are not only cheaper but also better and contain “customer intimacy”. And they also happen very, very quickly. For example, the smartphone disrupted the standalone GPS market with this Big Bang Disruption idea. Standalone GPS units 1) cost money, 2) aren’t updated in real-time, and 3) contain no integration with the individual customer. The smartphone changed all of that overnight. GPS software on smartphones was 1) free, 2) updated in real-time to even reflect current traffic patterns, and 3) integrated the users’ phonebooks to quickly find the users’ intended destinations. Many companies illustrate this concept of cheaper and better with customer intimacy: AirBNB, PayPal, Amazon, Netflix, Priceline, Uber, Coursera, Yelp, Waze, and the list goes on.
They also went so far as to graph a new Market Adoption curve for the Big Bang Disruption. The traditional Market Adoption curve has five phases of adoption by users: Innovators, Early Adopters, Early Majority, Late Majority, Laggards. The Market Adoption curve for a Big Bang Disruption has two: Trial Users and Everybody Else. Due to this new curve, the timeframe for a Big Bang Disruption has also been squished into four stages:
1) Singularity – This is the stage where you are experimenting with your product and getting a little traction for it. This is the “Trial Users” phase.
2) Big Bang – This is the scale-as-fast-as-you-can phase as Everybody Else adopts your product quickly as it goes viral through social media.
3) Big Crunch – This is the de-scaling phase where a new product might be on the horizon or everyone who was going to get your product already has it. In this stage, you reduce inventories and shed assets in preparation for the next stage….
4) Entropy – This is the stage where you can become components for another company or create a new singularity. It’s the endgame.
I really enjoyed the webinar and look forward to reading the book. Have you read the book? What did you think? Has your company experienced – or instigated – Big Bang Disruptions?
