You hear the term “disruption” a lot nowadays, whether it’s referring to Industry-shaping titans like Uber and Spotify or plucky startups looking to make waves in a specific market.
It’s tempting to refer to any novel approach to business as “disruption,” but the term has a more specific meaning. According to Harvard Business Review, “Disruption describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses.”
Most often, that small company leverages a new technology (or new use for an existing technology) in its David and Goliath battle. For instance, you can trace Uber’s disruption of the big taxi businesses back to their creation (and novel use) of mobile rideshare technology.
That begs the question: how do disruptive technology platforms succeed? What makes them such formidable competition to established, often much bigger incumbents?
Let’s explore three reasons disruptive technology platforms succeed – with examples.
They Solve a Common Pain Point
You could argue that most successful businesses, even conventionally established ones, won their initial success by solving a common pain point or problem. However, disruptive technology platforms have made an art of this standard business practice.
An early example of a disruptive technology platform is Salesforce, which set out to “democratize enterprise technology” by applying emerging technologies to traditional CRMs. Before Salesforce, businesses needed to hire costly IT workers to establish customer relationship management solutions – a pain point for several companies.
In a twist that illustrates just how far disruptive technology platforms have come, Fortune reports that Salesforce, one of the original disruptors, is ripe for disruption from up-and-coming startups.
They Serve Segments Traditionally Overlooked by Incumbents
A key way that disruptive technology platforms gain a foothold in their industry is by serving segments that the other guys overlook.
Take, for example, Nobul, an online marketplace where real estate agents compete against one another to represent buyers and sellers, who can choose their agent based on various criteria.
The marketplace leverages a proprietary algorithm to comb through agents’ sales histories, verified reviews and other data to create a “match score” for each agent.
It’s a tech-savvy way of solving real estate’s opacity problem, one that appeals to millennials frustrated by misinformation and overlooked by traditional real estate agencies.
Nobul CEO Regan McGee is clear that “Millennial first-time home buyers are our target demographic.” He shared with Yahoo Finance that, nowadays, “when people buy and sell real estate, they want to do it the same way they do everything else in their lives, like traveling or getting an Uber.
They Look at Things in a Completely New Light
Nobul is also an example of how disruptive technology platforms look at things in a completely new light. They aren’t a real estate agency; instead, they facilitate real estate partnerships with a tech-forward bird’s eye view of the industry.
Airbnb’s model is another classic example of a disruptive technology platform that peered outside the box. At a time when the hospitality industry thought in terms of hotels, by-phone bookings, and top-down organizational structure, Airbnb applied to share economy concepts alongside new mobile technologies.
Disruptive technology platforms don’t succeed by dint of being new. They succeed by solving a common problem, looking at things in an entirely new way, and serving a traditionally-overlooked segment of the market – all by using cutting-edge technology.