The Best Ideas Are The Ones That Expand a Market

The Best Ideas Are The Ones That Expand a Market

There is no shortage of ways to come up with entrepreneurial ideas, ways of doing something better, ways of thinking, approaches to problem solving, etc.. Companies are started everyday, most are copycats of what already exists, of what is hyped, of what already works.

Though innovative ideas are everywhere, most entrepreneurs don’t set out to be innovative or disruptive. They set out to do more of the same or improve on what already exists; this is why most ideas are not new and disruptive; they’re improvements on what already exists.

How do you find ideas that have potential for disruption? Here’s a shortcut to boost your thinking: the best ideas are the ones that expand a market.

Here are a few examples:

  • Taking something that was expensive and making it cheap.
  • Something for power users and making it for anyone.
  • Something complicated and making it simple.
  • Something regional and making it global.

Accessibility to a non-consuming segment, low cost and simple are the hallmarks of disruption. The late Clayton Christensen, defined disruptive innovation as solutions that are simpler, more affordable and more accessible to a non-consuming group.

Most innovation is not disruptive; but when it is, it expands the market. Disruptive innovation has 3 key criteria:

3 Criteria of Disruptive Innovation

  1. A disruptive innovation gives new consumers access to product or service only available to consumers with a lot of money or skill;
  2. Disruptors, used existing technology but with a low cost business model aimed at a non-consuming market. So, improving the technology is not
    the focus; it’s the market.
  3. A low-cost strategy only works when you have a high-cost competitor.

Examples of Disruption

There are many examples of companies that disrupted markets:

Netflix Video demand
Wikipedia Publishing
Skype P2P communication
Salesforce CRM
Google AdWords Online ads

What isn’t disruption?

Just as there are examples of disruptors, there are also non-disruptors that might look like disruptors:

Uber It didn’t open up a new market or capitalize on low gross margins.
Google Google isn’t a disruptor because it wasn’t the first search engine. But Google did disrupt the online ads business model with AdWords.
Tesla Cheapest models start at $35,000, making it too overpriced to appeal to the low-level market.

When can you disrupt?

Here are 3 signals when the time is ripe to disrupt:

  1. When an underserved market exists;
  2. When no market exists;
  3. When existing businesses ignore low profit (for them!) customers.

Key takeaways

Here are the key takeaways about disruptive innovation:

  • Innovation doesn’t have to be disruptive.
  • True disruption is a gamble.
  • Disruption takes time.
  • Business models, not products, are disruptive.
  • Disruption is rare. Understanding disruption is hard. Disrupting is harder.
  • Disruption is not about destruction. It’s about creation: new products / services, new choices, for more people.

Bottom line: The best ideas are the ones that create or expand a market; these are considered disruptive. It doesn’t happen often, it takes time when it does and you usually see disruption after it happens.