The disruption delusion: what happens when customers aren't included
Jul 24, 2014

Do you like buzzwords? Over the years at Creative Good, we've encountered our share of them, like "synergy" and "disintermediation" and "empowerment." Like all buzzwords, they offer vaguely exciting possibilities while delivering little or no actual meaning. Which is a description that seems increasingly apt, these days, to what is perhaps the most widely revered buzzword of them all: disruption.

The word needs little introduction to anyone who has spent any time in the business world. The startups most hotly pursued by tech journalists are those with "disruptive" products overturning their industries. Likewise, products that emerge as a success are often described as being disruptive. Even enterprise-level organizations are looking for ways to avoid being disrupted by smaller, nimbler competitors.

Even Customers Included, our recent book describing Creative Good's worldview, has a section on disruption - but we take a different stance. Instead of blindly praising anything that can be termed "disruptive," the book asks the key question: what about the customer?

To make the case, the book points out the fiasco suffered by Netflix a few years back, when the company made a surprise announcement that it planned to move its DVD business into a poorly-named spinoff called "Qwikster." Despite the resounding and very public failure of the move (almost a million customers cancelled their subscriptions), a leading tech journalist actually praised the decision, calling it "disruptive." As if responding to the obvious and deafening vocal opposition from customers, the journalist wrote, "the problem with customers is that they don't always know what's best for them." In other words: make a radical decision, regardless of whether it succeeds or fails, and feel free to ignore the customer. That's disruption.

I don't believe disruption was originally meant in this way. Clayton Christensen, who described the concept in his popular book "The Innovator's Dilemma," didn't say a lot about customer experience. And as written in Customers Included, I think disruption, like any good tool or framework, can be valuable - as long as customers are included in some significant way. Instead, the problem with disruption is how it is commonly understood and practiced. The mania to pursue anything that can be called "disruptive" can tempt executives to make high-profile mistakes on par with Qwikster.

This is the case made by Jill Lepore in her recent New Yorker article, The Disruption Machine, as she explores "what the gospel of innovation gets wrong." I'd recommend the article to anyone who is tired of the cult-like reverence paid to the twin buzzwords of "disruption" and "innovation" these days. The details of her research, which took a second look at Christensen's original case studies, have been called into question (by John Hagel, Michael Raynor, TechCrunch, and Christensen himself, who in a fit of defensive posturing called Lepore's piece a "criminal act of dishonesty"). To whatever extent you want to prove or disprove the theory of disruption, these may be worthwhile resources.

But the case remains that, in popular usage and practice, "disruption" has gone too far, and is understood too little, to do much good for most teams. I say this because very frequently when I hear about a "disruptive" product or strategy, I notice a key point missing. Customers aren't included. As pointed out in our book:

Pursuing disruption by itself is not sufficient to create a winning strategy. One could propose a dozen ways to disrupt any given industry - and launch a company or initiative to try out each one - but without some thought toward the impact on customers, all those disruptive ideas are likely to fail. Companies that aim to be disruptive should include, not ignore, the customer.

I wish the acolytes of disruption would take this to heart. The "disruption delusion" is that you should ignore the customer when making strategic decisions. Anyone who has read our book knows that the truth is just the opposite.

The fundamental underpinning of Christensen's work is based on the premise that over time, market competitive forces tend to push companies towards products that over-serve the needs of all but the most demanding customers. A common example of this tendency is seen in the "feature-function arms race" that afflicts the consumer electronics sector. This corporate behavior opens the door to disruptive entrants who START with the recognition that current market offerings do a poor job of satisfying the needs of a large segment of the market. Thus cunderstanding ustomer needs lies at the heart of successful disruptive products.

What Netflix did with Qwikster had nothing to do with customer needs and everything to do with Netflix' desire to reposition its product mix and distribution channels. Reed Hastings himself has offered several mea culpas in reflecting on this mistake, admitting he failed to take customer input into account. I guess the tech writer Mark cites in his piece didn't get those memos.

As for Ms. Lepore, I agree with her view that disruptive technology theory has been stretched too far. However, not all of that is Christensen's fault (tech writers bear some blame!). Having said that, I think Lepore herself went too far in blaming Christensen's work for business problems (e.g. the financial services meltdown of 2008) that have nothing to do with disruptive technology theory. Thus she is guilty of committing the same crime that she accuses Christensen.