Good CEOs focus on disruptive innovation. Great CEOs win

The pitfall of disruptive innovation

Startup founders obsess over disruptive innovation.

VCs look for startups that promise disruptive innovation.

Yet, ironically, customers are the only ones who neither want nor need disruption.

Image is generated by Dall-E3

The 3D flop

It’s the early 80s. I’m sitting in the only cinema in my hometown that shows 3D movies. I’m wearing special glasses, oversized for my young face. I see a traffic warden’s baton floating above the theater. Water sprays from car wheels on the screen as if drenching the front rows. It feels like pure magic.

In 2009, I saw this magic again when Avatar took the world by storm. Its success inspired TV manufacturers to release full lineups of 3D TVs. 3D television shipments totaled as many as 41 million units in 2012, but in late 2013, the number of 3D TV viewers started to decline. Production of 3D TVs ended in 2016.

It was a disruptive innovation that customers didn’t want to pay for. Such things happen more often than you might think.

A disruptive technology merely offers a new way to solve an old task. It’s the customers who make (or don’t make) it successful.

Disruptive insanity

What do companies like Airbnb, Uber, IKEA, Amazon, Tesla, Apple, and Netflix have in common? You’ll find these names in every book on disruptive innovation.

But note that:

1. The list is very short. The same names go from book to book.

2. The list isn’t growing. ChatGPT has been sensationally successful, but it still isn’t a business—just a technology.

Jeff Bezos’s ‘Day 1 thinking’ is a thing of the past, and Elon Musk’s visionary approach has become a half-forgotten legend.

Amazon’s latest “innovation” is copying Temu’s business model.

But their overhyped ideas led countless startup founders to believe that disruptive innovation is a must. It gave birth to a whole bunch of ridiculous ideas and products.

Here are some examples:

Yo was a social mobile app whose only function was to send the user's friends the word "yo" as a text and audio notification.

Amazon Fire Phone aimed to leapfrog competitors with a glasses-free 3-D screen.

Zume tried to automate pizza production using robots in trucks.

Washboard was a startup that delivered you 80 quarters each month for the price of 108 quarters, so you could use laundromats that didn't accept credit cards.

And this “fully automated robotic refueling system” is a great example of a technology solving a non-existent problem and merely mimicking human actions instead of rethinking and simplifying the process.

And let’s not even get started on the countless scooter rental services, drone deliveries, self-driving cars, and other tech marvels that were once all the rage but are now all but forgotten.

Tech nerds think that all people are like them and believe that flooding the world with talking fridges and AI-powered kettles will somehow make it a better place.

Why do so many brilliant minds try to bless the world with their new super-duper technology only to fail time after time? Because their fundamental premises are totally wrong.

Check out my book, Red and Yellow Strategies: Flip Your Strategic Thinking and Overcome Short-termism

Solutions in search of problems

Entrepreneurs are mesmerized by how some companies change the world with just a few lines of code. They believe that 'change' is the keyword here.

‘Reinvent,’ ‘revolutionize,’ ‘redefine,’ ‘transform,’ ‘disrupt,’ ‘reimagine’ – these are the verbs that tech journalists, also nerds who haven't launched a startup, love to use. Basically, they believe that you need to take a traditional way of solving a task and turn it inside out.

It can work, and I use similar tools myself when conducting innovation workshops. But being different doesn’t necessarily mean being successful. Juicero became the laughingstock of Silicon Valley, though it offered a new way to drink juice.

However, the biggest problem is that customers actually hate novelty.

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16 basic needs

Steven Reiss discovered and proved that all humans on this planet share the same 16 basic needs (I wrote about them here).

These basic needs drive our decision-making and behavior in any situation. This includes deciding whether we are willing to pay $12.000 for this ‘virtual ten-foot screen on your desk’ or $2.800 for this tri-fold smartphone.

We can understand the basic need #15, which Reiss called ‘tranquility,’ also as ‘safety’ or ‘stability.’ And it is a critical need.

For most people, an ideal world is one where tomorrow looks pretty much like yesterday.

Stability, predictability, and safety are the most cherished values in this universe. And most disruptive innovators intuitively knew this.

Airbnb didn’t “reinvent” apartment rentals. It presented a better way for renters and landlords to find each other.

Uber didn’t “reinvent” the taxi service. It invented a better way for passengers and drivers to find each other.

Netflix’s DVD rental service and streaming platform didn’t force users to relearn anything. They already knew how to rent a videotape or use websites.

The first iPhone apps looked like digital copies of real things – notepads, email, phone books, etc. (the so-called skeuomorphism).

Tesla cars have the same pedals and steering wheels.

Paradoxically, the most disruptive innovations were the least innovative in terms of consumer experience. They allowed consumers to gradually adapt to new technologies and weren’t radically new—something consumers strongly dislike.

Image is generated by Dall-E 3.

You can reinvent everything under the hood but don't mess with the interface. Chances are, customers won’t like it.

Conclusion

As Paul Graham said, don’t fall in love with your solution, fall in love with the problem.

Don't look for a problem that matches your solution; it rarely works.

Dive into the customer experience and find real problems and pain points (read more about it here).

A disruptive innovation is one that changes customers’ lives for the better but doesn’t force them to radically alter their habits.

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Read also: Five Ingredients of Customer Centricity