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Why Tesla, Uber & The iPod Are Not Disruptive Innovations - Keller


Why Tesla, Uber & The iPod Are Not Disruptive Innovations

The term disruptive is so common now that it has become a buzzword, the fact that it is used so often means that it has actually lost its true value and has swayed away from what it really means.

Truly what is a disruptive innovation?

Originally used by Clayton Christensen in his theory of Disruptive Innovation. To break it down simply, a disruptive innovation is making a product accessible to a new market. So generally that is taking a product only the wealthiest people can afford and making it affordable for the masses.

What are some examples of disruptive innovation?

1. Spotify

Think about your Spotify, Apple Music, Tidal, Google Play etc. music library and imagine how much that would cost if you had to purchase every CD or every Album on iTunes or how much time it would take to download them from Limewire, RIP 🙁

So Spotify is a true example of a disruptive company because,

it made what was once a really expensive activity to enjoy accessible. Previously our only other option was to commit crimes because no one could afford to buy a new CD every week let alone everyday. If you can’t tell I love Spotify.

2. Pacific Southwest Airlines (PSA)

The original budget airline. In 1949 when PSA started, flying was only for the richest of the rich. PSA established themselves because they wanted to make flying accessible to all and encourage people to fly instead of taking a train or bus.

What makes PSA a disruptive company?

They made flying a norm, their first flights, San Diego to Burbank, California cost $5.65 compared to a $50 average at the time. With inflation that’s $60 vs $400, meaning a 660% reduction in price.

3. Apple iPhone

Considered one of the first “affordable” computers the IBM System, released in 1968 it held a maximum of a whopping 48,000 bytes worth of memory, which is equivalent to 1/20th of a megabyte. It also cost $253,000, in today’s money that is $1.8 million. The original iPhone released in 2007 cost just $599, held 4GB and could do a whole lot more than what your $1.8 million dollar computer could in 1968. It took 39 years to get there, however we now have computers in our hands.

Why is the Apple iPhone disruptive?

They were able to transform something from costing as much as a New York Penthouse to becoming a nominal investment in comparison. Being so small with so much power too makes them accessible in price and also functionality.

4. Dry Bath

A product developed by Ludwick Marishane on his Nokia 6234, the South African national didn’t like taking baths and decided to come up with a solution. This was Dry Bath, a sanitiser like product that allows him to take a bath without water. This product is significant because over 2.5 billion people across the globe do not have readily access to water and sanitation. Due to a lack of sanitation diseases such as Trachoma thrive on unsanitised people. It is an infection in the eye that leaves 8 million people blind, yearly. After doing the scientific research, writing a 40 page business plan, patent and formula all on his Nokia 6234 Marishane brought baths to millions that before never could take a quick hot shower.

The reason why Dry Bath product is disruptive is because,

it opened up a whole new market of 2.5 billion people to be able to bath. Something they could not do before because of various circumstances.

What are some amazing innovations but not disruptive ones?

1. Tesla

Tesla has brought electric cars to be somewhat of a norm, they have opened up a new market of electric cars and forced every other car maker to speed up the process of bringing electric vehicles to market.

Tesla has created a great innovations, however they are not disruptive. Why?

Due to not going after a new market. A Tesla is still just a car, they are in the luxury end of the market and they still cost the same as any other luxury car. For Tesla to be disruptive they would have to sell the cars for $500, then a whole new market of people could afford a car. This would be awesome.

2. Uber

One of the share economies great pillars! The company has created an amazing product that has allowed us to ride in the comfort of someones family saloon. Uber has made getting a taxi more simple for both the rider and driver and I could never imagine myself in a traditional Taxi again.

Why is Uber not a disruptive company?

They haven’t brought the Taxi Transport to a new market, riding with Uber is still not any cheaper than a Taxi, their innovation is just an easier process of Taxi travel than there was previously.

3. The Apple iPod

The iPod was awesome, it was the bridge between Mobile Phone and Smartphone. 20,000 songs on one device seemed ridiculous at the time, an amazing innovation yes, disruptive no.

Why is the iPod not a disruptive product?

It didn’t make music any cheaper, it didn’t make it any more accessible to anyone, once again the iPod just made music listening more simple.

What can we learn from Clayton Christensen’s disruptive innovation theory?

Disruptive innovations will continue to happen regularly, for new businesses this exciting. For established businesses disruptions are something they have to be ready for. Much like Intel, many other businesses will fight competition from businesses who create cheaper alternatives which will open up their products to new markets.

So businesses are left with Christensen’s Innovators Dilemma:

Do we create a better product for a smaller market?


Do we create a worse product for a larger market?

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