It Is What It Is

July 18, 2017

Since 1990’s, we have heard about disruptive innovation leading to disruptive competitors. Of course, most of those talking about it don’t know what it is. Even the creator of the concept, Clayton Christensen, sadly notes

“Despite broad dissemination, the theory’s core concepts have been widely misunderstood and its basic tenets frequently misapplied…. There’s another troubling concern: In our experience, too many people who speak of ‘disruption’ have not read a serious book or article on the subject. Too frequently, they use the term loosely to invoke the concept of innovation in support of whatever it is they wish to do. Many researchers, writers, and consultants use ‘disruptive innovation’ to describe any situation in which an industry is shaken up and previously successful incumbents stumble. But that’s much too broad a usage.[1]

But back to disruptive competition. This is not the first effort, but a major recent effort, to dissect the concept of competition and to explain how the marketplace really works. Consider these: predatory competitor, imperfect competition, and even Joseph Schumpeter’s creative destruction. They are all efforts to detail situations which veer from “perfect” competition to explain economic behavior.

Now, recall that perfect competition presumes the presence of perfect information, including information on competitors (bet you were wondering when I would get to that). When you drill down, you will find that what they all have in common is that there is less than perfect information. It may be about markets, competitors, technology, consumers, trends, etc. In other words, until you get to a monopoly situation, where there is NO competition, competitors suffer when they lack perfect, or even good, actionable intelligence on these key topics.

The lesson: those companies lacking ongoing intelligence efforts, whether centralized, DIY or both, are likely to be the victims rather than the beneficiaries of disruptive/imperfect/predatory/destructive competition!

[1] Clayton M. Christensen, Michael E. Raynor, and Rory McDonald, “What Is Disruptive Innovation?”, Harvard Business Review, December 2015, https://hbr.org/2015/12/what-is-disruptive-innovation.



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