Nowadays, the market presents us with thousands of products and services to choose from. Clearly, innovation is at the heart of every business and is practiced at such a fast pace.
Creative technologies sprout every now and then as a response to the problems and challenges that customers are facing.
As a result, competition for businesses is now tighter than ever, and companies are in a race in bringing innovative ideas to life. However, only a few of these innovations are considered to be truly ‘disruptive’.
As the term is often misunderstood by plenty of organizations, let’s discuss what ‘disruptive innovation’ is, and then we will look at some examples of disruptive brands that took the world by storm.
Let’s get started.
What is disruptive innovation?
Changes in the competitive landscape have made companies feel the need to continuously adapt. Innovation pushes brands to think outside the box, but not all of them were ‘disruptive’ enough to cause a significant change in their chosen industries.
The concept of ‘disruptive innovation’ was first coined in 1995 to describe small companies that became market leaders by beating out established organizations through devising products in ways that have surprised the world.
Disruptive innovation, therefore, in its simplest sense, means either:
- Capsizing an existing market through new business models or technologies
- Creating a whole new market segment by extending value that varies from the current offerings of top-tier businesses
When can you say that a product is ‘disruptive’?
Disruptive innovations are not advanced versions of already existing products. They are entirely different from sustaining innovation, which only focuses on turning the good into better.
Instead, disruptive innovations redefine trajectories by offering new benefits such as affordability, accessibility, and convenience. Disruptive innovation is more often than not, a cheaper alternative that caters to a larger yet least demanding population.
By the way, if you want to read and talk more about innovation, we invite you to our regular innovation webinar. It’s a live event where you can learn everything related to innovation. Feel free to sign up!
Examples of Disruptive Brands That Shook the World
When disruptive products are made, established brands are often ‘dethroned’.
Despite being at the bottom of the competition, disruptive brands are able to move up the market by offering low-cost solutions that also meet the requirements of high-demanding customers.
This phenomenon makes them even more appealing than their distinguished competitors.
A product is considered disruptive if it has the following properties:
- Low cost
- Highly accessible
- Lower gross margins than its incumbents
- Caters to least-demanding markets before experiencing tremendous growth
- Dramatically upends existing markets or creates a new market segment
- Supported by new technology or business model
Here are six disruptive brands that shook the world:
1. Amazon Prime
Amazon is one of the world’s most renowned ecommerce companies. It enjoys a massive market share in a lot of industries and has constantly shown the effects of conducting successful disruptive innovation.
Specifically, Amazon has caused a disruption in brick-and-mortar retail through Amazon Prime. They have made online shopping a seamless experience by continuously studying and perfecting warehouse facilities to ensure that items are easily ordered and shipped.
Amazon Prime first rolled in 2007 with unlimited two-day shipping for an annual price of $79. This move came with risks as expedited shipping is costly and customers might end up abusing the program.
However, according to Jeff Bezos — the owner of Amazon — this was a risk worth taking, and he was right.
Because after 14 years, Amazon Prime already has more than 200 million members worldwide that enjoy a variety of perks like same-day delivery, streaming, reading, and shopping benefits for $119 a year.
2. Google Maps
Google has ruled the tech space for years now, but Google isn’t a disruptive brand because of how famous it is as a search engine. Before Google became almost everyone’s ‘go-to’ in searching items on the internet, other search engines like Yahoo! were also present.
Technically speaking, as a search engine, Google isn’t the first of its kind. It was only an improved version of its predecessors, such as Yahoo! and MSN Search.
However, Google Maps definitely made the cut.
Google Maps is utilized as a substitute for physical maps and atlases. It has also replaced GPS satellite navigation devices. The app can be used to locate different places across the globe, with full-on pictures, directions, and suggested routes along with ETAs.
3. Spotify
Spotify is a leading music streaming platform. However, what makes it disruptive isn’t the music, but the business model that brought Spotify to where it is today.
The freemium-based revenue model is mostly utilized by businesses that operate online. Spotify allows its users to listen to music without having to pay a single cent. However, they have to put up with advertisements, and they cannot use the app offline.
Premium membership on the other hand enables users to listen to music offline without any ad interruption.
This type of business model gives companies easy access to a wide customer base.
Brands with a freemium-based revenue model provide basic services first as they form relationships with customers. Then, they would offer additional features or services for an extra cost.
4. Airbnb
Airbnb allows homeowners to rent their properties out to travelers for a budget-friendly price. This innovative platform has offered a cheaper alternative to hotels and has been recognized by many as a marketplace for universal travel.
Airbnb’s innovative idea came when founders had to look for ways to generate money for rent.
With a stroke of luck, all the hotels within the vicinity got sold out because of an upcoming conference in San Francisco, so they took the opportunity by letting people stay at their place and sleep on an air mattress.
Fortunately, they were able to secure some bookings. They ended up gaining positive feedback as hosts, so they decided to share the idea with others, and then, Airbnb was born.
The variety of accommodations it provides has caused a major disruption in the hotel industry. Unique properties like tents, boats, apartments, villas, and treehouses had all been listed as alternative places to sleep at.
It also enables guests to experience the destination like locals do while providing access to items like laundry and cookware. Now, Airbnb has more than 150 million users worldwide.
5. Apple’s iPod
The iPod ended the reign of cassette tapes and CDs as a way to purchase music.
While other companies were busy making the next walkman and mp3 technology, Apple focused on producing a digital music player that allowed users to sync their songs from computers to MP3 players. The iPod, together with iTunes, made this process a seamless one.
Moreover, in comparison to its predecessors, the iPod was relatively smaller in size and was greater in terms of storage capacity and battery life. Upon its first release, the iPod had 5 GB of storage, a user-friendly interface, and 10-hour battery life.
The iPod, being FireWire capable, also made it easier for people to access portable music by solving a bunch of compatibility issues in terms of file formats and transfer methods.
In the end, Apple’s success with the iPod made it a significant game-changer in the tech industry, leading it to produce a series of world-renowned mobile touch-screen devices including tablets and smartphones.
6. Netflix
It would be impossible to write about disruptive brands without including Netflix’s breakthrough example. Before becoming the streaming giant that it is today, Netflix started out as a DVD-by-mail rental service.
This concept may have worked as video renting was a hit at that time. However, “Blockbuster,” a billion-dollar company that was also offering the same service, was doing such a great job in leading the market.
So, seeing the internet’s potential, Netflix decided to level up their game and adapt to the changes in technology. After securing a $30 billion dollar investment from a French principal investment firm called Groupe Arnault, Netflix switched to streaming completely.
This new approach gave people access to a variety of films and TV shows without having to leave their homes in exchange for a very affordable subscription fee.
Initially, their subscription-based model only attracted online shoppers. However, as time passed by, people started to love the fact that they didn’t have to go to a store to rent or return a movie anymore.
Now, Netflix has 208 million users worldwide and is recognized as the king of streaming services.
The Reality: Disruptions Take Time
Disruptive innovations change the industry. Most of the brands cited in this article started out as plain entrants to the market too, just like every other company that hopes to generate billions of sales in a year.
The only thing that began to change the narrative was a disruptive innovation.
These companies have successfully transformed the way we live, but it didn’t just happen overnight. It took them time, effort, and resources to turn their ideas into a reality.
This proves that in order for innovation to successfully happen, businesses have to respond to the needs of consumers creatively. In essence, organizations need to have a clear understanding of whether there is a need for change, not only to adapt, but also to stand out.
The market must be presented with cheaper alternatives that support widely accessible business models, or technologies that could upend competition and open new market segments.
Unlike sustaining innovation, disruptive innovation does not seek to refine existing products for current customers. Instead, it strives to create products and services that are simple and affordable.
Take note that it takes a lot of ideas (and trial-and-error) to be able to create a disruptive product. You may want to check out our free beginner’s guide to idea management. Download it for free and learn what you can about collecting as many ideas as possible.
