Disruptive Innovation and Small Business Growth Strategies

Harvard professor Clayton Christensen coined the term disruptive innovation to describe “a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves ‘up market’, eventually displacing established competitors.” An example of disruptive innovation is the cell phone (disruptor) displacing fixed line telephony.

There’s never been a better time to be a disruptive innovator. If you have a good idea, the barriers to market entry are shrinking. Business innovations like crowdsourcing and outsourcing provide cheap access to technology development, marketing resources and administrative support. You don’t need massive resources to invest in hiring employees to perform these business functions for you – you can design business graphics, develop an iPhone app or outsource your IT function using the new business models.

At the same time, large corporations have never been more vulnerable. A new survey by Right Management, the consulting arm of staffing group Manpower, finds that a whopping 84% of employees are planning on searching for a new job in 2012. That’s not surprising, considering how big business has laid off employees, reduced salaries and eliminated perks over the past 4 years. Do you think that this 84% is focused on providing innovation and exceptional customer service to their employer’s customers? I would posit that they are not and that their customers are ripe for the picking by a nimble competitor, particularly a disruptive innovator.

Small businesses that focus on providing groundbreaking solutions to customer problems are in a good position to take business away from corporate monoliths, particularly at the smaller end of the market. While large enterprise customer-facing employees are focused on internal politics and avoiding the next round of layoffs, small business owners can focus on providing excellent service and solving customer problems efficiently and affordably.

A good example of a disruptive innovator is Hubspot, a provider of marketing automation software located in Cambridge, MA. Formed in 2006 by MIT graduate Darmesh Shah and venture capitalist Brian Halligan, Hubspot started their business by providing an end-to-end internet marketing software solution to small businesses, a market that was not served prior to their entry. Five years later, Hubspot has grown to be ranked #33 on the Inc. 500 list (#2 for software providers.) As is typical of disruptive innovators, Hubspot is moving upmarket into the enterprise market.

Small businesses that use inbound marketing technology like Hubspot’s can get found by buyers and earn the right to have a conversation with them. When prospects see that you have the capabilities, determination and drive to solve their problems, you will win your share of business.

So take heart my friends – become a disruptive innovator!