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Building a Truly Disruptive Company Requires These 5 Elusive Things

Many so-called disruptors haven’t really earned the label. Here’s how to tell.

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BY Scott Painter - 17 Aug 2018

PHOTO CREDIT: Getty Images

As far as redemptions of the past decade go, the act of being "disruptive" has enjoyed a cultural turnaround that's perhaps only second to that of Brussels sprouts.

Being labeled a disruption used to mean a letter to your parents from school; nowadays, it's a title befitting a billionaire. But what does it really mean to be a true disruptor? And, more importantly, should becoming one be a primary goal for your business?

For sure, the term "disruptor" gets thrown around pretty arbitrarily. But, to me, there are some pretty defined pillars around what it means to actually be one--and several good reasons why that should never be the initial aim of any entrepreneur.

A disruptor creates new behaviors.

First and foremost, being a disruptor means changing consumer behavior to the point that some commercial activity is now done in a fundamentally different way.

In my mind, Google Maps is among the clearest examples of a disruption because its existence means we simply don't use paper maps anymore. I spent more than a decade driving around Los Angeles with the Thomas Guide to the city's streets as my constant backseat companion. The day I tried Google Maps, I threw my beloved, dog-eared Thomas Guide in the dumpster. That's disruption.

Same goes for cell phone cameras, which made one of America's most revered companies, Kodak, obsolete overnight--along with the suddenly laughable prospect of dropping off your film at a "processing center" for the strangers behind the counter to gawk at. Yes, that is something we humans actually did.

Facebook, desktop computing, cell phones, the internet, the automobile--all of these are monumental disruptions in that they literally created a new way for humans to behave--from chatting up our friends with our thumbs, to accessing all the world's information in the bathroom, to being able to traverse the entire state on a whim.

It's also easy to identify disruptors by holding them up against obvious non-disruptors.

Commercial air travel was a huge disruption because of how drastically it changed how people get from one city to another. Light rail, on the other hand, is just an above-ground subway.

McDonald's is a top-of-the-fold disruptor that brought an immediacy to food service on a worldwide scale that simply didn't exist before. Your favorite food truck, meanwhile, is nothing more than a nice change-of-pace lunch call. It will likely not keep you from eating your next meal at a place with walls.

Timing is everything.

It's true that being a disruptor often means being first. After all, Amazon is a true disruption; Walmart's new delivery app is just them trying to compete.

But sometimes being first takes a back seat to matching your company to a specific beneficial wrinkle in time. I had the good fortune to create a company with Idealab's Bill Gross, who cites--in a must-watch speech for any business leader--the curious example of Airbnb. He notes that companies like Airbnb had been attempted several times before, but that Airbnb happened to come about at a time when the economy was down and people were looking for ways to make extra income by opening their homes to complete strangers--an unthinkable idea in the relatively flush times that came before.

Of course, timing alone won't matter if the other hard-wired strengths of your business aren't there. But among the countless situational elements that have to go your way in creating a disruptive business model is simply whether the world is ready for it.

Size matters.

We all know the gorillas in the disruption game. I'm talking about a company like Amazon, which is expected to own 50 percent of the U.S. e-commerce market by 2021.

But disruption is actually possible at much lower levels of market penetration. Airbnb, for example, only accounted for about 8 percent of all paid lodging demand in the U.S. in 2017, but has unquestionably shaken up the space like no company before it.

Sometimes size is also related to scope. Tesla is an unquestioned disruptor to the electric car market, where it is likely to account for 60 percent of EVs sold in the U.S. this year. But with only 1.44 percent of the car and light truck market in the U.S., the company has a long way to go before it's considered a disruption to the automobile business as a whole.

The industry matters too.

Disruptors tend to exist in winner-take-all markets where they can be the dominant, if not sole, winner--and not all industries are accommodating to this. For example, almost nothing you wear will ever amount to a disruption.

Warby Parker is a great business with amazing stats, but until someone invents an eye drop that permanently fixes near-sightedness, eyewear companies will keep fighting their same conventional fight for market share--with nary a disruptor to be found.

Same goes for shoes. No matter how innovative or cool their product, no shoe company--from Tom's to Crocs to Nike--can ever really be a disruptor. Footwear is just too diverse as an accessory.

After all, sometimes a shirt is just a shirt.

Also, don't set out to be one.

Disruption is easy to spot after it's happened. We look back and go, "Wait, why did we ever do that another way?" But disruption is infinitely harder to see coming--and oftentimes nobody can explain the magic of why one company, product or idea becomes a disruptor while so many others do not.

Sometimes predicted disruptions just cool off. The Segway was initially touted as the next thing in personal transportation. Now it's regarded as a goofy, two-wheeled vehicle that turned out to be nothing more than a passing fad with no economic structure to support it. Bird is certainly a hyper-growth success story, but there remains a huge question mark around whether scooters will be a serious solution for the last-mile problem in transportation.

Online education is certainly no fad; it's helping a lot of people get access to an education they might not have had otherwise. But it also hasn't impacted attendance rates at brick-and-mortar colleges one iota and, therefore, hardly qualifies as a disruptor.

My point in all of these examples is this: While it might be fun to call balls and strikes around the idea of who represents a real disruption and who doesn't, the definition itself can (and should) never be the goal for any entrepreneur.

That's because achieving true disruption requires the favor of so many factors out of your control as to amount to catching lightning in a bottle--which is why there are so few of them.

A true disruptor only goes public once every three to five years--a mere drop compared to the countless non-disruptors with killer business models, terrific teams and fiercely dedicated customers that simply do an existing thing better than anyone else.

These non-disruptors are the companies that are most impactful to the world's economic tempo. And if you're an entrepreneur, this is the club that you should strive to be in.

Worrying about anything else is just a disruption.

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