A disruptor is a company that has the ability to change the dynamics of a market, create new opportunities, and redefine the rules of the game. Disruption occurs when a company enters an established market and fundamentally changes the way that market works. Disruptors create new markets, new business models, and new ways of thinking. The idea of disruption is not limited to technology companies, and it can happen in any industry.
The idea of disruption is not new. The term gained popularity in the early 2000s with the publication of the book “The Innovator's Dilemma” by Clayton Christensen.
The Innovator's Dilemma
Clayton Christensen's book "The Innovator's Dilemma" explores the concept of disruptive innovation. The book argues that disruptive innovation is 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.
The Innovator's Dilemma describes two types of innovation: sustaining innovation and disruptive innovation. Sustaining innovation is the type of innovation that companies usually engage in. It involves making incremental improvements to existing products or services to keep up with the competition. Disruptive innovation, on the other hand, involves creating new products or services that are fundamentally different from what already exists in the market.
Netflix's Disruption in the Movie Rental Industry
Netflix is a prime example of a company that disrupted an established market. When Netflix was first founded in 1997, its business model was to rent DVDs by mail. The company's original name was Kibble, and founded by Reed Hastings, who was frustrated with the late fees he had to pay on his Blockbuster rentals. By creating a subscription-based service that allowed customers to rent DVDs without any late fees, Netflix was able to carve out a niche market for itself.
Netflix's DVD rental service was a disruptive innovation because it fundamentally changed the way people rented movies. Instead of having to go to a physical store, customers could order movies online and have them delivered to their doorstep. This model was particularly attractive to customers who lived in rural areas, where it was difficult to access a physical movie rental store.
As Netflix continued to grow, it started to disrupt the traditional movie rental industry. Blockbuster was the dominant player in the industry at the time, and it had a vast network of physical stores. However, Blockbuster was slow to embrace new technologies, and it failed to recognize the threat that Netflix posed.
By the early 2000s, Netflix had started to eat into Blockbuster's market share. Netflix's subscription-based model was more convenient and cost-effective than Blockbuster's physical stores. By the mid-2000s, Blockbuster was struggling, and in 2010, it filed for bankruptcy.
Netflix's Pivot to Content Streaming
Netflix's success in the DVD rental market paved the way for its next disruptive innovation - content streaming. By the mid-2000s, streaming technology had become more prevalent, and Netflix recognized the potential of this technology to disrupt the movie industry further.
In 2007, Netflix launched its streaming service, which allowed customers to watch movies and TV shows online. Initially, the selection was limited, but as Netflix continued to grow, it started to produce its content.
Today, Netflix is one of the most successful content creators in the world. Netflix's original content strategy was based on two key principles. The first principle was to focus on niche content that appeals to specific demographics. The second principle was to create high-quality content that rivals the quality of traditional movie studios.
In a 2018 interview with Variety, Netflix's then Chief Content Officer and now co-CEO, Ted Sarandos, spoke about the company's strategy for creating original content. Said Sarandos, “We focus on niche content because it's easier to make a big impact when you're going after a specific audience. We also focus on high-quality content because we believe that if we can create content that is as good as or better than what traditional studios are producing, we can disrupt the industry.”
Netflix’s Investment in Original Content
Netflix's approach to creating original content has been highly successful. The company has produced award-winning shows such as “Stranger Things,” “The Crown,” and “House of Cards.” These shows have not only been popular with audiences but have also received critical acclaim, with many receiving Emmy nominations and awards.
In 2022, the company spent over $16 billion on original content. This investment has allowed Netflix to create high-quality content that rivals the quality of traditional movie studios.
Netflix's investment in original content has been a significant factor in the company's success. By creating content that rivals the quality of traditional movie studios, Netflix has been able to attract and retain subscribers and disrupt the industry, yet again.
The Disruptive Leader as a Leadership Identity Archetype
Leadership identity refers to the distinct set of characteristics, values, and behaviors that define an organization's approach to organizational leadership. It is the collective identity of a company's leadership team that shapes the organization's culture, vision, and reputation. Your organization’s leadership identity can directly influence performance, including your ability to attract and retain employees, achieve strategic objectives, and build strong relationships with stakeholders.
Bold Narratives has developed The Leadership Identity Framework, a new blueprint that can help organizations establish a stronger presence in the market by aligning their leadership identity with their goals and culture. The framework identifies eight distinct leadership identities that govern an organization's potential influence and role in the world.
One of the eight leadership identity archetypes is The Disruptor. Disruptive companies are catalysts for transformation, often pushing boundaries and redefining the way business is conducted. They challenge existing markets or industries through innovation and unconventional strategies. Such companies often introduce groundbreaking technologies, products, or services that fundamentally change the way business is done or create entirely new markets.
Overall, a disruptive company is one that challenges existing paradigms, introduces innovation, and creates substantial value for customers and stakeholders. It is driven by a visionary leadership team that embraces change, takes calculated risks, and continuously seeks ways to revolutionize the business landscape.
Qualities of the Disruptive Leader
Disruptive companies, like Netflix, are defined by several qualities that set them apart from other leadership archetypes. These include:
- Risk-Taking: Disruptive leaders are not afraid to take risks and embrace uncertainty. They understand that innovation and breakthroughs come from stepping outside of their comfort zone and are willing to make bold decisions, even if they involve a certain level of risk.
- Entrepreneurial Mindset: Disruptive leaders exhibit an entrepreneurial mindset, constantly seeking opportunities for growth and improvement. They are proactive, creative, and resourceful, always looking for ways to innovate and drive change within their organizations.
- Agility and Adaptability: Disruptive leaders are agile and adaptable, able to quickly respond to changes in the business landscape. They possess a high degree of flexibility and are comfortable with ambiguity, adjusting their strategies and plans as needed to stay ahead of the curve.
- Disruptive Thinking: These leaders are known for their disruptive thinking, challenging conventional wisdom and pushing the boundaries of what is possible. They encourage their teams to think outside the box, fostering a culture of innovation and experimentation.
- Resilience: Disruptive leaders understand that setbacks and failures are inevitable in the pursuit of innovation. They demonstrate resilience in the face of challenges, bouncing back from failures and using them as opportunities for growth and learning.
At Bold Narratives, we help you identify and own a leadership identity best aligned with your vision and culture. Owning and investing in your leadership identity will help you: 1) efficiently communicate your position, 2) influence standards and trends, 3) accelerate growth, and 4) motivate your employees.