Decoding disruption: 4 frameworks for understanding industry change

1. Summary

Today, most are familiar with Clayton Christensen-style disruption: the introduction of new technology that is lower-cost and “good enough” yet often creates a wholly new market. This is a powerful theory, and was appropriate for its time. Times, however, change. There are now other types of disruption to be explored.

This analysis reviews the likely new models of industry disruption. Gigaom Research will work with the Gigaom community via a survey to test these new disruption hypotheses.

It’s important not to confuse disruption with competition. True disruption plays the role Christensen ascribes to it: changing the structure of markets, the participants within them, and the balance of power, rather than simply releasing ideas and products that might outweigh those of other players.

The following are new forms of industry disruption:

• Adjacency platforms, such as Alibaba’s Alipay, that organize emerging or existing ecosystems yet are also highly centralized, powerful hubs that deploy products, services, software, and payments. These platforms typically organize horizontal disruption (multiple lines of attack on a vertical industry) or show no respect for vertical borders.
• Decentralization and creative destruction describes Schumpeterian disruption that is ideologically driven by entrepreneurs whose goal is to disrupt oligopolies. This type of disruption is increasingly capable of rolling out alternative global services (e.g., Bitcoin,) using the homogeneity and connectedness of what’s typically the open-source community.
• New globalism enables disruption from a completely new technology and/or player, especially a software-defined competitor (e.g., Netflix in global video streaming) betting on a new global market and often taking advantage of global mobile access.
• The reverse data model implies the current dominance of the Google/Facebook model could be challenged by offerings that manage online identity and presence on behalf of customers. The customer becomes a significant, empowered node, rather than one that surrenders control to the platform provider.

Thumbnail image courtesy of hansslegers/iStock.