How Can Small Businesses Benefit From Disruptive Innovation

Disruption has always been an integral aspect of the business arena.

History has many examples where one innovative idea shook up the industry, and new methods replaced old practices. However, in modern times, the momentum at which new businesses disrupt industries has increased. Disruptive innovation refers to innovations and technologies that disrupt existing markets and value networks. Today, technology continues to evolve business practices as new advancements keep coming to the fore, disrupting industries. People generally have their loyalties attached to brands, and they do not switch to new offerings for meager differences. 

The primary motive behind venturing into the business world is to establish a name and generate substantial revenue. Small businesses strive hard to remain competitive and establish a big name in the market. For this, entrepreneurs have to work hard and apply innovative techniques to create something unique and new. Sometimes, these innovations disrupt sectors drastically. With disruptive innovations, small brands can give big companies a tough time and capture their customers. 

Clayton M. Christensen coined the term ‘disruptive innovation.’ He stated that disruptive innovations generally occupy the bottom of the market while meeting the needs of high-growth markets at a reasonable cost. 

Below is a comprehensive insight into how small businesses can benefit from disruptive innovations:

  • Improved Efficiency 

Understanding the power of advanced technology, such as AI, can improve business efficiency, resulting in a company’s fast growth. Artificial Intelligence, commonly referred to as AI, has widely transformed business operations. With AI integration, organizational systems can assess multiple analytical models and forecast the outcomes. Small businesses can integrate AI to speed up data analysis, enhance reporting time, and ultimately improve business efficiency. Companies operating on a small scale can benefit from the disruptive technology of AI and machine learning and make better decisions to improve their sales.

A good example is Uber, which realized the potential of using technology to disrupt a small market portion. Thus, this disruption led the company to become a ride-hailing giant organization. Today, many organizations are eagerly seeking ways to improve efficiency and disrupt the market for their benefit. They invest in innovative product development, carry out extensive research, and hire the best creative people. Those who possess an innovative streak can opt for an online MBA degree program to further expand their creative skills and work with such companies. 

  • Market Expansion

By applying principles of disruptive innovation, small businesses can find an area of opportunity within traditional industries. Small businesses need to show perseverance if they fail initially and cannot expand their market. As per Christensen, characteristics of disruptive companies include a smaller target market, lower gross margins, and simple products/services that may not entice customers initially. These products or services have the potential of overtaking the established companies. Since these businesses offer lower gross margins, other firms moving upward in the market do not consider them a threat and create space for them at the bottom. These small firms can emerge as competitors and tighten up the competition for settled enterprises. In no time, industry giants don’t even realize that such disruptors capture and expand into broader markets taking over their market share. 

  • Leverage Technology

The main driver of disruptive innovation that we have seen penetrating markets is technological disruptions. Many entrepreneurs are wise enough to identify a gap left by industry giants and manipulate it using technological solutions. Such technological disruption can come in the form of apps providing convenience, new gadgets having VR/AR tech or advanced systems like blockchain technology. Small businesses can exploit advanced technological solutions to their advantage and cater to a segment by solving a unique need. It could be anything, from utilizing the Internet of Things to providing 3D printed meat. The options and opportunities available in the market are limitless. 

  • Appeal to a Lucrative Niche

Whenever we talk about disruptive innovation, the first company that comes into people’s minds is Netflix. Undoubtedly, it took over BlockBuster within a matter of a few years and dominated the market tremendously. But how did it reach such successful heights so quickly? It was primarily because Netflix targeted a niche market but one that provided lucrative returns. Thus, we can say that small businesses can benefit immensely from disruptive innovation as although it attracts a small chunk, this chunk can become quite profitable. 
Disruptive innovation has occurred in the past, and it will continue to transpire in the coming years. Small businesses should evaluate their practices to pinpoint areas that need improvement and enhance their processes by working on them. They can integrate disruptive technology for business operations, expand into new markets, and explore niches to boost their revenue. The secret of disruptive innovation is to break the existing business model and pave the way for the emergence of a new one. Therefore, if you seek to disrupt the status quo, work on innovative solutions and provide unique offerings.


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