Disruptive Innovation in the Entrepreneurial Ecosystem

A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leaders and alliances. The term was defined and phenomenon analyzed by Clayton M. Christensen beginning in 1995.

Not all innovations are disruptive though, revolutionary as they might be in nature. For example, the staple item ‘Bread’ was not a disruptive innovation, because we have had bread for as long as grains were sown. However, the fresh packaged White Bread slices that come in to the local grocery store every day is indeed an entrepreneurial innovation that disrupted the traditional notion of bread and it’s making as well as uses. The brands ‘Wonder Bread’ in North America and ‘Modern’ in India set a new trend, introducing new breakfast and snack items to the traditional menu.

The market for four wheelers essentially remained intact until the debut of the lower-priced MarutiSuzuki 800 in the 90’s. The mass-produced automobile was a disruptive innovation, because it changed the transportation market significantly in India.

History tells us that it’s usually the “outsiders” who have bought about disruptive changes in any given industry. Take the example of the now thriving ‘Goli Vada Pav’ as entrepreneurial disruptive innovation. A disruptive processes can take longer to develop than by the conventional approach, the risks associated to it is higher than the traditional route but once deployed, it achieves a much faster results and ,much higher degree of impact on the established markets. Goli Vada Pav failed not once but twice over, due to a host of different reasons. Venky(owner of GoliVadaPav) and his team refused to give up. They kept at it till they figured out the unique formula for creating their own success story in the largely unorganized chaat and snacks market of India (especially the smaller towns and Tier 2 & 3cities.) Today, Venky can be proud of the fact that Goli Vada Pav is a remarkably profitable venture.

It’s proven that with a sound plan and clear fundamentals chances of striking gold, even in saturated markets, is way more with disruptive innovation. Moving away from the age old example of Maruti 800 with its basics only model at unbelievably low price, let’s look at the launch of Renault Mahindra ‘Duster’ which was a sporty sedan-SUV at the price of a mid-sized sedan! The waiting list grew and so did the lagging Mahindra’s earned profit after almost a decade. Scorpio was the last stallion out of the Mahindra stables and was that was almost a decade and half ago!

With disruptive innovation, the risk of failure looms large but so does the probability of hitting it big! Plan right and innovate according to the needs of the market that you would be catering to and not try to sell what you “feel” is the right innovation for a given market. No amount of clever tactics will turn your venture into a success, if you don’t know your market.

Category: Entrepreneurship