I lampoon the word “disruptive” for being badly overused. On the other hand, I often refer to the concept myself. Perhaps I should clarify.
- Market leaders serve high-end customers with complex, high-end products and services, often distributed through a costly sales channel.
- Upstarts serve a different market segment, often cheaply and/or simply, perhaps with a different business model (e.g. a different sales channel).
- Upstarts expand their offerings, and eventually attack the leaders in their core markets.
In response (this is the Innovator’s Solution part):
- Leaders expand their product lines, increasing the value of their offerings in their core markets.
- In particular, leaders expand into adjacent market segments, capturing margins and value even if their historical core businesses are commoditized.
- Leaders may also diversify into direct competition with the upstarts, but that generally works only if it’s via a separate division, perhaps acquired, that has permission to compete hard with the main business.
But not all cleverness is “disruption”.
- Routine product advancement by leaders — even when it’s admirably clever — is “sustaining” innovation, as opposed to the disruptive stuff.
- Innovative new technology from small companies is not, in itself, disruption either.
Here are some of the examples that make me think of the whole subject.
1. The best example of DBMS industry disruption is Microsoft SQL Server in the 1990s. Every time I talked with Microsoft, they asserted that Oracle would have great difficulty competing with SQL Server, because SQL Server was much cheaper than Oracle, and was offered to businesses and departments who would be satisfied with its features, in many cases through sales channels that Microsoft dominated. Microsoft also had a massive advantage over Oracle in ease-of-administration. Dan Rosenberg and Andy Mendelsohn eventually led Oracle to narrow that gap, but for years Microsoft’s administrability edge fit perfectly into the “simpler/cheaper” part of the disruption story.
Microsoft turned out to be correct in its optimism, and is now a formidable competitor to Oracle in enterprises much larger than it once appeared able to serve.
2. Oracle executed an awesome “Innovator’s Solution” response (to Microsoft and other threats). Oracle has gone bonkers expanding its stack, with massive acquisitions in applications, hardware, middleware and more. And while upstart DBMS vendors certainly get some projects Oracle would want, on the whole Oracle has done an excellent job of maintaining both margins and account control.
All good things come to an end, and I think the finish to Oracle’s glory days is closer than the beginning. But the length of Oracle’s run at the top is a testimony, in large part, to its excellent record of strategic decision-making.
That said, the end of my nicely lucrative consulting relationship with Oracle came in the late 1990s, when I sent over dire and in retrospect accurate warnings that Oracle was blowing the internet opportunity. Even Oracle’s strategies aren’t always correct.
3. MySQL wasn’t a huge success at disruption. MySQL had a textbook disruption strategy — cheap, simple, pursuing markets Oracle wasn’t strong in. But MySQL never accomplished much in Oracle’s core or semi-core markets.
Even so, Oracle went well out of its way to buy up MySQL, limiting future threats from that source.
4. BI isn’t really undergoing disruption. QlikTech and now Tableau have gained business intelligence market share by offering good-looking, easy-to-deploy systems to departments. But that’s exactly what the current market leaders did in the 1990s, and they haven’t entirely forgotten the land-and-expand model. Yes, I’ve predicted a much-needed reinvention of/revolution in BI — but better technology alone rarely a disruption makes.
5. SaaS can be a vector of disruption. Salesforce.com rode software-as-a-service to disruption of the sales force automation and customer relationship management (CRM) markets. SaaS was easy to deploy in the distributed way that field sales forces needed, and just plain easy to deploy as marketing departments took control of their IT.
I also think SaaS is going to dominate the market at small enterprises, specifically ones too small to have a lot of domain specialists on their IT staffs, on the strength of what are new business models for sellers and buyers alike. But it’s not yet clear whether SaaS vendors will disrupt many more large-enterprise software markets.
6. Netezza was disruptive:
- Much cheaper than alternatives.
- Much easier to deploy and administer.
- A smart purchase even for “departments” of 3 analysts or less.
But like MySQL, Netezza didn’t grow up to take over the world.
7. Hadoop is disruptive. For reasons of price, scale, and capabilities, Hadoop doesn’t compete much with analytic (or other) RDBMS. But it aspires to. It also aspires to compete with object storage, predictive modeling tools, and various other categories of software as well.
Hadoop’s disruptive success has already surpassed Netezza’s, and probably MySQL’s as well. How far it goes will be one of the big stories of IT’s next 7-10 years.
8. NoSQL, taken together, is disruptive, for similar reasons to why MySQL was. But that doesn’t mean that any one particular NoSQL product should be viewed as particularly disruptive. Even MongoDB has accomplished less to date than MySQL eventually did.*
*But also in less time, as my friends at 10gen would surely hasten to point out.
9. There isn’t much disruption in NewSQL. Mainly, NewSQL is a collection of efforts to win with better technology than what came before.