When Being “Disruptive” is a Good Thing (Part 1)
Editor’s note: The posts in the “When Being Disruptive is a Good Thing” series were originally published as Guest Posts by Mark Beckford, before he joined NextBillion.net’s team as Staff Writer.
Someone or something that is disruptive is usually associated in the negative. The sub-prime mortgage crisis has disrupted financial and housing markets. That’s bad. My son was being disruptive at dinner while someone else was talking. That’s bad too.
But I believe the idea of being deliberately disruptive can be a huge positive when used in the development of strategies, organizations, products, business models and markets.Â Specifically, disruption can be useful for companies that are trying to serve low income markets and eradicate poverty, all while building a successful business venture.
Back in early 2005, I read CK Pralahad’s The Fortune at the Bottom of the Pyramid and Clayton Christensen’s Innovator’s Solution just as I started my new job as co- General Manager of the Emerging Markets Platforms Group at Intel.Â Our group was responsible for developing and selling new PC and mobile products designed to meet the specific needs of those at the bottom of the pyramid.Â One of these products is the Classmate PC, which has become famous mostly because of the ongoing public battle between it and Nicholas Negroponte’s OLPC XO laptop.
The theories put forward in Prahalad’s and Christensen’s books, combined with my experience trying to create a viable business with customers that make only $1 to $2 a day, is the foundation on which liesÂ my belief that a disruptive approach is the way to go when building businesses focused on selling and improving the lives of the poor.
When I talk about being disruptive, I’m talking about strategies and techniques that change the game, overturn the status quo, and ultimately make the biggest possible impact.Â In this post and the next, I will touch on the following areas where I think disruptive strategies are required:
- Product strategy
- Business models
- Leadership and management
Disruptive Product Strategies
Let’s start with the product strategy.Â Clayton Christensen’s theory is that a disruptive innovation or technology is aÂ product that is easier to use, more affordable and adds a unique value that the market leading product does not.Â These products become wildly successful, often completely displacing the existing product or technology.Â Think of the PC displacing the mini-computer.Â The telephone displacing the telegraph.Â Digital photos displacing traditional photos.Â The list goes on.Â Â Will the mobile phone displace the PC?Â Maybe.Â If it does, then it becomes a disruption to the PC.Â
I believe the product that will displace the PC will come from a company that has developed an easy to use, affordable device that has some very useful “unique” value to those at the bottom of the pyramid.Â That was my conclusion after reading Prahalad and Christensen – and was the path I wanted to set Intel on.Â
Classmate PC is not a disruptive innovation.Â The idea was to create R&D labs in four emerging market countries and incubate various devices based on ethnographic research done in those regions.Â Unfortunately, because of the world’s attention on Negroponte’s OLPC and the competitive pressure it put on Intel (the XO uses AMD chips, Intel’s competitor), the Classmate PC project has sucked up most of the available resources and thus I think it is unlikely that Intel will create that disruptive device, and as such, is not taking the world by storm (at least not yet).Â
Is OLPC’s XO a disruptive innovation?Â Probably not.Â It has some differentiating qualities in the “unique value” category but nothing that are mind-blowing new or different.Â A unique value is usually very straightforward.Â The phone lets you talk vs. tap on the telegraph.Â The transistor radio was portable.Â The unique value is usually a gaming-changing quality.Â
It also strives to be more affordable, although any computer device runs into the same challenges of the floor on component and distribution costs and economics.Â It has been built with an interface that works to improve ease of use, but often these features are skin deep and are challenged, as you get deeper into the software and content.Â
There is nothing to stop either device from eventually becoming a disruptive innovation … many innovations are iterative vs. incremental.
Editor’s note: Stay tuned for Part 2 of Mark’s post, which will explore disruptive innovation on the business model and leadership levels.