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Putting the Power of Disruptive Innovation to Work
- Read in 13 minutes
- Audio & text available
- Contains 8 key ideas
Disrupt Yourself (2015) is about embarking on the journey of constant discovery that is your career. By following your interests, discovering your unique talents, taking the right risks and being prepared to learn, you will find yourself constantly stimulated and satisfied by your work.
Key idea 1 of 8
There are many types of risk; some are more important than others for success.
Have you ever considered skydiving? Maybe you watched a video on YouTube and thought it looked like fun. But before you make that jump, it’s important to do your research and ensure you know what kind of risks you’re taking. This same philosophy applies to jumping into the world of business as well.
If you’re preparing to take a risky business move, it’s important to distinguish between competitive risk and market risk.
So what makes something a competitive risk? Well, let’s say you have an idea for a great product and it has tested well in a variety of studies and appears to have the potential for huge success. But, at the same time, you’re pretty sure that similar products are being developed by other companies that are aware of the demand.
By going ahead in this scenario you’re taking what’s known as a competitive risk, since you’ll be competing against others.
A market risk, on the other hand, is when you have a unique idea for a new product or service but are uncertain about its chances of success.
In this scenario you have no idea whether your company will generate revenue, but you are certain that your unusual idea will give you a head start on the competition.
While a competitive risk is seen as the safer route, since there’s a known demand for the product, the market risk is usually the best option if you’re looking to disrupt yourself.
In fact, studies show that start-up companies fare better when they take a market risk.
In 1995, Harvard Business School professor Clayton Christensen conducted a landmark study on the computer industry. He determined that two kinds of disc drive companies had emerged between 1976 and 1993, and they’d either taken a market risk or a competitive risk.
Of these companies, it turned out that only six percent of competitive risk companies had reached $100 million in revenue, while 37 percent of the market risk companies had soared past the $100 million mark.