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Making Sense of the ‘D’ Word

Over the last two years, much of our research has sought to separate the myths from the realities of digital disruption. Surprisingly, some of the knottiest challenges have been rooted in language. Depending upon what one means by disruptive innovation, it is either commonplace or rare because the D word is used by different people in two entirely different (yet entirely correct) ways.

Big D Little D

Big D disruptions are those that threaten the existence of your firm and industry, whereas little d disruptions tend to reveal your firm’s competitiveness.

In the worlds of business books, business strategy and business schools, ‘disruptive innovation’ is primarily used in the way that Clayton Christensen first did in 1997 in his seminal work, The Innovator’s Dilemma. In this view, disruptive innovations are those where a radical new technology or business model leads directly to the demise of once-iconic firms – be they Kodak, Digital Equipment, Borders or Blockbuster. At the LEF, we call these ‘Big D’ disruptions. They quickly turn the advantages of incumbents into life-threatening liabilities. Although they are relatively rare, the attention they attract is huge.

However, to most people, disruption is just a word routinely used for anything that shakes up the expected flow of events. Think of a heckler at a political rally, or protests on college campuses. In businesses today, these types of disruptions happen all the time. Consider the way that MICR-encoded cheques, credit cards and ATM machines all shook up the operational practices of their times, but without leading to the demise of banking industry incumbents. We call these ‘little d’ disruptions. They happen every day in virtually every industry.

Thus Big D disruptions are those that threaten the existence of your firm and industry, whereas little d disruptions tend to reveal your firm’s competitiveness and how good you are at responding to technological challenges and opportunities. The importance of each varies widely by firm and sector.

Perhaps most confounding, the difference between Big D and little d disruption is often only clear in hindsight. Take the case of mobile payment technology. Will this innovation be co-opted by the major banks as new technologies have in the past, or will it enable many consumers to dispense with traditional banks altogether? Even individuals deeply engaged in the field struggle to anticipate which way events will unfold, while those on the outside can often do little more than guess. But strategically, the ability to correctly distinguish between the two forms of disruption can be worth literally billions.

Distinguishing between Big D and little d disruptions should be at the heart of your firm’s digital strategy perspective.

Taken together, these two different usages account for much of the confusion in today’s marketplace. In a 140-character world, it’s pretty much inevitable that the ubiquity of little d disruptions would often merge with the dramatic consequences of Big D change to exaggerate the impact of new technologies and firms. But for our clients the message is clear. Distinguishing between Big D and little d disruptions should be at the heart of your firm’s digital strategy perspective. As a start, you need to make sure that everyone in your firm is on the same definitional page.


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