Companies don’t disrupt; people do

Meet Whitney Johnson – former Wall Street investment banker and top-ranked media and telecom analyst, entrepreneur and now author of Disrupt Yourself: Putting the power of disruptive innovation to work (2015).

Johnson, who co-founded investment firm Rose Park Advisors with Harvard Business School professor, Clayton Christensen, has found through her own professional journey that the power of disruption lies with the individual.

“We give a lot of airtime to building disruptive products and services, to buying and/or investing in disruptive companies, and we should. Both are vital engines of economic growth. But, the most overlooked engine of growth is the individual,” she says.

Indeed, when we think of market disruptors, we think of companies who up-end an entire industry by a stroke of creative, unprecedented innovation – take digital streaming service, Netflix for example.

Disruptive innovation
Disruptors secure their initial foothold at the low end of the market, offering inferior, low-margin products. They then evolve, improve their product and expand their market share – effectively stealing competitors’ customers from under their noses.

While “disruptive innovation” – a term coined by Christensen – is a popular way of thinking about innovation-driven growth amongst leaders of small, entrepreneurial companies, for Johnson, she faced the most significant “disruption” when she made the dramatic decision to leave her job on Wall Street.

“Notwithstanding the considerable career and financial risks involved, it was time to leave my comfortable perch and become an entrepreneur, a move that to others may have seemed nonsensical.

“But for me, I was at the top of the learning curve – I was making as much money as I could, there weren’t opportunities for advancement. There’s this human imperative to move forward, and I knew it was the moment for me to jump to a new curve.”

As a leading thinker on driving innovation through personal disruption, Johnson now works with executives and organisations to apply the theory of disruptive innovation to their own firm.

“Directors want to drive innovation in their organisation. I see the best way to drive that innovation is through personal disruption. You not only need to consider, is your organisation taking on competitive or market risk, but are your people? How is your business and how are your people playing to their strengths?”

Johnson shares some of her lessons learned along the way:

If it feels scary and lonely, you’re probably on the right track

“We all want to start a disruptive company or invest in disruptive ventures, but in reality an innovation that takes place at the low-end of the market or where there is no market (yet) is just not that sexy.

“When you make a decision to take on market risk, to ‘play where people aren’t playing’, whether it’s your company or a personal career move, there are going to be times when it feels lonely and scary and you don’t know what your identity looks like.”

Your odds of success will improve when you pursue a disruptive course

“What Christensen found in his analysis of the disk drive industry (which is discussed in The Innovator’s Dilemma, and is foundational to our investing), is that firms seeking growth via new markets are six times more likely to succeed than firms seeking growth by entering established markets, and the revenue opportunity is 20 times greater. When we start in a place where no one else wants to play, where the scope of the opportunity appears limited, the odds of success actually improve.”

Gender diversity is crucial to innovation

“One of the reasons that women tend to be good disruptors is that almost by definition they have had to play where other people aren’t playing and build networks outside of the traditional hierarchy. They intuitively know how to think disruptively. So, for example, when the door of investment banking was closed to me, I walked through the equity research door instead.

“What a disruptor says is, there’s a competitive risk here, and I may not be able to get funding, so I will figure out how to take market risk and do a crowdfunding campaign. If you have women helping to lead your organisation, they’re going to be able to help you look for disruptive opportunities.”

There are times for disruption, but there are times for execution as well

“My whole premise is that companies don’t disrupt; people do. That doesn’t mean that you disrupt all the time, everywhere, in every circumstance. There’s a time to jump to a new learning curve and a time to scale the curve. Those who can surf the S-curve waves of learning – and mastering – have the edge.”