What does “Disruptive” mean, really?
The term “Disruptive” has become popular in the early stage circles. Founders and entrepreneurs proclaim their technology is disruptive, as a quick definition for the insightful approach to solving problems. In listening to many investor pitches this year, for which COVID-19 has offered time and deliberation, I’m finding that few founders really understand the test of disruptive.
Why? First, let’s remove the “Unicorn” scale of disruptive, as few will ever reach that status. Technology, on its own, is not disruptive. I would assert, even if it can be, few really are in this age of technology revolution. Instead, it’s the targeted to shift the dynamic forces in the marketplace that makes technology disruptive. And, this is where founders/entrepreneurs most often fail.
Great ideas often die when reaching the marketplace. For many reasons, the path to a successful go-to-market plan are often not well defined. It’s precarious for sure. External forces require incredible discipline in evaluation, assessment and strategy. While internal competencies must develop forward to take targeted, disciplined and tested steps -- both within to grow and externally to compete. It’s the emergence from the trough of the J-Curve.
I have observed there are four primary drivers in the failure to reach a “disruptive” status in the marketplace. Interestingly, none of the four reasons are called out on the mapped on the J-Curve. Instead, they are drivers that insidiously plague a company’s success in emerging.
Reason #1:
Adequate Go-to-Market Investment. By the time an early stage company begins taking its product to the marketplace, it is needing to transition in its investor profile. There are many reasons for this transition needing to occur, but at the core is the understanding of a go-to-market thesis, and it often is over-simplified in discussion. Capital planning for the bottom of the J curve, requires a shift from predominantly product development focused and moving into the markets – a reallocation of money and focus. The emphasis of ‘how much money’, who ‘gets to spend the money’ and ‘the measures of wisely spent money’ are not typically the strength of technology innovators and never serve the appetite to keep innovating.
Reason #2:
Allowing the organization to grow. Growing the cores competencies in go-to-market planning requires Sales, Services, Systems and Key Leadership. The ability to strengthen the internal organization while entering the competitive landscape is essential… and challenging. Investors in the early stages of product development often have a “build it and they will come” view. There is often a false belief the heavy lift is done—‘now its time to sell it’. Entrepreneurs are emboldened to launch new innovation investments—often remodeling products multiple times without the guidance of Product Management skills. Investors and entrepreneurs create a silent partnership to diminish the voices of sales and marketing people. The most common tale-tell sign is to hire a friend for Leadership positions rather than properly recruiting based on relevant skills and experience.
Reason #3:
Move from R&D to Product Management and execute with discipline. Innovators like to continue to innovate. They are comfortable in the innovation space. During the emerging period from the J-curve, investments must broaden across the organization and development budgets necessarily become 10-15% of total organization spend. The only way this occurs is through deep commitment to the early stage, commercialization cycles. All of which, challenge the focus of dollars from the entrepreneur wish list of R&D to a market-driven approach.
Reason #4:
The Entrepreneur must become a CEO, or a CEO must be hired. Nothing more must be said.
Only when the above 4 issues have been identified and addressed does the early stage venture begin tackling the strategic and tactical requirements in moving though emergence. Without tackling these difficult challenges in the emerging, high growth venture, go-to-market will become ever increasingly expensive and with a diminished probability of success.