Big Data Is Changing Disruptive Innovation

Big Data is Changing Disruptive Innovation by Vincent Chhabra

Disruptive innovations today are defined by three key factors:

  1. They are more cost effective.
  2. They deliver better functionality and usability.
  3. They provide solutions to ignored segments of the market (i.e. they’re more accessible to more people.)

As curious entrepreneurs wonder what the next disruptive innovation will be, they use these three factors to try to predict advancing challenges to the current state of things. Historically when looking out for disruptive companies, we have looked first to the lower end of the market. Past disruptors like Apple (back when they introduced their first computer) or Sony (when they introduced their transistor-based television) were able to enter the market because they provided a cheaper piece of technology while competitors focused on their higher-end products/services. Once they dominated the lower end, they were then able to scale their products to become better solutions for everyone. But if we look back to the three factors I mentioned previously, you’ll notice that being on the low-end of the market isn’t a defining attribute. And it’s not where disruption is coming from, necessarily, today.

Nowadays, thanks to giant technological advances and the sheer volume of available information from which to learn from, disruptive innovations are fully capable of entering the market at competitive rates. Products and services no longer have to be low-end in order to fit the criteria of disruption.

Take Uber for example – this company definitely didn’t start in the low-end sector of the market. That said, Uber fits all 3 criteria: it allowed the company to add lower cost drivers (UberX) which allowed them to charge less to their customers, and the app made car services more accessible to everyone and much easier to use. If this is not a prime example of disruptive innovation, I don’t know what is. Other great examples of disruptive innovators who didn’t necessarily follow the low-end tradition, are Google’s Android phones (vs. Nokia) and 23andMe (vs. pharmaceutical companies).

What makes disruptive innovation even more exciting these days is the use of big data. Companies like Netflix and Google are using the enormous amounts of data they’ve acquired to continue disrupting the market. Netflix first grabbed audience’s attention by streaming videos, but the company has since radically changed the way content is produced. Google used its technology to map the world. They went on to analyze the data obtained from these maps to understand traffic patterns and street layouts, and now they’re working to build autonomous cars.

Disruptive innovation can now happen in bigger and better ways than ever before, and it can completely change any part of the market at any time. This has entrepreneurs excited, and also terrified. Those companies who learn to adapt to change once disruption hits will be the ones most likely to survive and grow with the times.

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