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DISRUPTIVE INNNOVATIONS A Way for Winning Opportunities in Disruptive Era By Yusril Miftah Rizki

DISRUPTIVE

INNNOVATIONS

A Way for Winning Opportunities in Disruptive Era

By Yusril Miftah Rizki

What is Disruptive Innovations?

N owadays we live in disruptive era. But what the disruptive era really is? Dis-

ruptive era is an era where disruption hap- pens. Disruption describes a process where- by a smaller company with fewer resources is able to successfully challenge established

incumbent business. Smaller company is able to disrupt established incumbent busi- ness because of disruptive innovation.

Disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network displacing established market-leading firms, products, and alliances (Christensen, 2003). Disruptive innovation happens as entrants or small businesses tar- geting low-end market and obtaining foot- hold by providing more suitable functionality products and services at lower price when in- cumbents focus on improving their products and services for their most demanding (and usually most profitable) customers rather than fulfilling the needs of low-end market.

for their most demanding (and usually most profitable) customers rather than fulfilling the needs of low-end

Making Disruptive Innovation

U nless you don’t know the basic con- cept of disruptive innovation, mak-

ing disruptive innovation is not difficult as you think. Understanding the basic concept of disruptive innovation based on Chris-

tensen’s theory will help you to make small business that can compete the incumbents. There are basic concepts of disruptive in- novation that need to be consider such as:

Disruptive innovations originate in low-end market foothold

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most profitable and demanding custom- ers with high quality products and services (mostly come with high price), they pay less attention to less-demanding customers or low-end market because in their view they have maximized profit if they focus to their most profitable and most demanding. The less-demanding customers became over- looked. This phenomenon opens the oppor- tunity for disrupter to provide “good enough” products and services at low price. At this condition, less-demanding customers buy products and pay services to the disrupt- er and low-end market foothold emerged.

Disruptive innovations catch high-end market by improving quality of their products and services

Initially, disruptive innova- tions emerged in low-end market and considered inferior by most of an incumbent’s customers (see Fig. 1). Particularly the customers will not merely change to choose disrupter’s product because it is less expensive. Instead, incum- bent’s customers wait until dis- rupter’s products catch the incum- bent’s customers standard quality so they can buy products as good as incumbents provide but with lower price. This disruption can make prices down in the market.

price. This disruption can make prices down in the market. Fig. 1 Disruptive Innovations Trajectory (Source:

Fig. 1 Disruptive Innovations Trajectory (Source: hbr.org)

Disruptive innovations use fewer resources

Comparing to the incumbents, disrupters tend to use fewer resources. It means less people and less equipment or facilities making the operation less cost. Uber, for ex- ample, they do not have vehicle to run their business, Instead, they rely on their drivers who have own their vehicle to deliver passenger. And Netflix which does not have phys- ical store like Blockbuster, video rental company, only depends on the internet net- work to provide streaming. Thus making the disrupters run their business at lower cost.

Opportunities in Disruptive Era

T here are so many opportunities in dis- ruptive era that we can take utilized by

creating disruptive innovations. As long we can see the opportunity by viewing a prob- lem in the low-end market and then provide

the solution for less-demanding custom- ers, we can create a disruptive innovation. Take example of Bookabuku, a lend- ing-borrowing book platform from Indo- nesia, Bookabuku provide platform for

the users to borrowing high quality books (mostly imported books) which are expen- sive for some people. Bookabuku enables low-end market to access imported books. Second example is online shop such as Bu- kalapak. Bukalapak creates online market that provide access to small and medium businesses to sell their products and help marketing the businesses so they successful- ly competing against large retail companies.

successful- ly competing against large retail companies. Fig. 2 Bookabuku and Bukalapak Logo (Source: google.com)
successful- ly competing against large retail companies. Fig. 2 Bookabuku and Bukalapak Logo (Source: google.com)

Fig. 2 Bookabuku and Bukalapak Logo (Source: google.com)

IMPLEMENTING DISRUPTIVE INNOVATIONS IN BUSINESS MODEL

IMPLEMENTING DISRUPTIVE INNOVATIONS IN BUSINESS MODEL Fig. 3 Elements in Business Model (Source: mitsmr.com)

Fig. 3 Elements in Business Model (Source: mitsmr.com)

Because there are so many opportunities, we should enthusi- ast to disruptive era because we also can win the competition as long we can see the problem of low-end market and provide simple yet effective solution to them. Another important thing is to bring the disruptive innova- tions in our existing business models.

In the business model, disruptive innovations are included in the value proposition that can help business run more effectively, conveniently, and affordably for low-end market. (see Fig. 3)

REFERENCES

Christensen, C.M., Horn, M.B., Caldera, L. and Soares, L., 2011. Disrupting College:

How Disruptive Innovation Can Deliver Quality and Affordability to Postsecondary Education. Innosight Institute. Christensen, C.M., Raynor, M.E. and McDonald, R., 2015. What is disruptive innovation. Harvard Business Review, 93(12), pp.44-53. King, A.A. and Baatartogtokh, B., 2015. How useful is the theory of disruptive innovation?. MIT Sloan Management Review, 57(1), p.77.