What is a Disruptive Business Model?

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What is a Disruptive Business Model?

There are business improvements. There are business innovations. And then there are disruptive innovations, an entirely new ball game in the world of enterprise.

Generally harnessing new technology, disruptive businesses are shaking out existing markets and grabbing their share through the sheer audacity of their business vision.

A disruptive business makes its mark by developing new business models, using the latest technology, or exploiting old and existing technologies in a new way.

Such businesses create markets by identifying new categories of customer for their product – what better example of a business disruptor than personal computers, creating an entirely new mass market for a product which simply hadn’t existed before?

Modern business disruptors

Netflix. Quickly tiring of its original venture – sending rental DVDs out by post – Netflix branched out in a radical direction by streaming on-demand video to its customers. Since officially launching in Australia at the end of March, share prices for all the major free-to-air TV networks have fallen sharply, according to a Fairfax media report.

iTunes. This amazing innovation has decimated the traditional music business mode, with iTunes boasting more than 70% of the downloaded music market. Apple has taken no prisoners when it comes to turning the world of record companies and recordings on its head.

Skype. In a relatively short time, Skype has revolutionised the way we connect with each other across the globe – catching both personal and business worlds in its disruptive net. Anyone with a laptop, a webcam and internet connection can take part in free, worldwide video calls which are generally as clear as a bell.

Uber. It’s hard to turn the radio on these days without catching a news bulletin about the latest in taxi disruptors. Since Uber launched its Australian services late in 2012, Fairfax reports that Cabcharge’s share price has been cut in half. Consumers have generally welcomed the increase in competition and reduction in fares.

Amazon. If you think Amazon is still an interesting little online venture selling books and music, think again. It’s now a full-on business disruptor, where you can buy pretty much anything you can think of online and have it delivered to your door in record time. By concentrating on low prices, huge selection and total convenience, Amazon has reinvented shopping.

New disruptors on the block

Pain-free dentistry. Here’s a good one. The world of UK private dentistry has cast aside its stuffy origins in favour of the new frontier – pain-free dentistry.

Despite the sceptics, it’s taken off all over the world, proving an absolute winner with nervous patients.

Virgin Galactic. Here’s a risky one. The original disruptor, Richard Branson, appears to be back on track with his dream of sending ‘ordinary’ guys and gals into space after recovering from the crash of his SpaceShipTwo rocket plane in October 2014, which killed one pilot. An “outpouring of support” has seen him press on with his ambitious project for civilian space travel.

Is there a downside to disruption?

The downside to a disruptor lies with those it displaces. Blockbuster video is bankrupt, having failed to respond to online movie rentals. The once mighty Kodak – ruler of the second half of the twentieth century – is now just a sideshow in the world of digital film and cameras. Record executives have had a decade of being pelted with the likes of Napster, BitTorrent, Spotify, iTunes and YouTube.

So it’s more vital than ever to keep your business model refreshed and your eye on an ever-changing market. Innovation is a wonderful thing as long you’re riding its wave, and not being crushed by it.

Today’s technological advances make it easier than ever to turn that cherished idea into a viable business, with little more than business name, a website and a 1300 number to launch your innovation onto a waiting world.

Ready, set, disrupt!