Market disruption is the aspiration of every new company. "Change the rules of the game" is what they hope for. And for good reasons. Market disruptions cause tremendous budgets to be diverted into new products, services, processes, and business models offered by market newcomers. In 2015, KPMG surveyed 1,200 CEOs of companies with annual revenue greater than $500 million each. 74% of them were concerned about startups disrupting their business model.

In his bestselling book The Innovator's Dilemma, Harvard Prof. Clayton Christensen explained the demise of great companies by their "sticking to what works", playing by the market's rules of the game, rules that don't seem to bind their new entrant competitors. He recommended that players in a market focus on identifying potential disrupting trends, and adopt them rather than reject them.

Technology disrupts markets. I agree with that. However, when I have to decide whether to focus on a market (like Christensen did) or a technology, I would focus on the technology every day of the week, and twice on Tuesday. Focusing on the market causes you to accept "the rules of the game." The more you know the market, its current players, current products and technologies, the more you identify with the market and its current dynamics, and the less you accept that it could be disrupted. When you are a market insider, it is hard for you to see what's outside that has the potential to disrupt it.

Cutting edge technologies, with the fastest moving trends (such as processing power, storage capacity, silicon size, power consumption, and the like) appear, incorrectly, to be unpredictable, simply because of their fast pace of change. The fastest moving technologies enable today what could not have been imagined two years ago, and would enable in two years what could not be imagined today.

Using technology future to disrupt markets includes 3 steps:

  • Forecasting of the fastest-paced technologies;
  • Taking an outsider's view of different markets they may disrupt; and--
  • Identifying the new value they could bring to those markets through the introduction of new products, services, or business models that couldn't be implemented with today's technology performance.

Source: Yoram Solomon

The diagram above shows that Technology 1 would initially disrupt market A at point X. Christensen's approach warrants that you watch Market A and look for technologies that may disrupt it further (such as Technology 2 at point Y). However, it is hard to find which technology has such potential. Instead, I suggest you follow Technology 1 and identify additional markets it has the potential of disrupting. This is how you could identify point Z, in which it would disrupt Market B. Follow the technology, not the Market.

The shrinking size of hard disk drives, combined with continuously reducing power consumption, allowed Apple in 2001 to take a PC-based component (the hard disk drive) and disrupt the portable music player market with the first iPod, offering an unprecedented amount of music (1,000 songs) that could be stored on a single device, and a completely new way of selling, delivering, and consuming music. That same trend helped me, in 2004, find the opportunity to create USB 3.0.

My book Bowling with a Crystal Ball explains how to do that. You must study technologies that have the potential to disrupt your market, even if you don't exactly know how. Forecasting battery or electric motor technology trends to predict disruptions to the automotive industry might be more obvious than researching processing power and storage capacity trends. The former would help envision an electric car, which already exists. The latter would help envision a self-driving car. Both should be done. Once those projections are made and trends plotted, move 7-10 years into the future along those trend lines. Focus on the opportunities then. The question to be asked (and answered) is: "what could be done with the technologies that would be available in 7 years that couldn't be done today?"

This article is an adapted excerpt from my books Bowling With a Crystal Ball and Un-Kill Creativity.

Published on: Nov 8, 2016