Introduction
The word “disruption” gets thrown around so casually in business that it’s started to lose its meaning. Every startup claims to be disruptive. Every conference panel features a discussion about “disruptive technologies.” And most of it misses the point entirely.
I’ve built five technology companies from scratch, and I’ve invested in more than 100 startups as a venture capitalist. And the pattern I keep seeing, in my own work and across the companies I’ve backed, is that disruption doesn’t come from technology. It comes from the deliberate choices that specific firms make about how to compete.
The USB flash drive didn’t disrupt the floppy disk on its own. Apple made a strategic decision in 1998 to ship the iMac G3 without a floppy drive, forcing the entire industry to follow.¹ The technology existed, but it took a firm willing to kill its own product line to make the shift happen.
Why Most Companies Get Disruption Backwards
When I talk to leadership teams about innovation, there’s a common assumption baked into how they think about disruption: they treat it as something that happens TO them. A new technology emerges, or a scrappy competitor shows up, and suddenly the ground shifts beneath their feet. But that framing puts you on defense by default, and companies playing defense rarely win.
The organizations that sustain competitive advantage over long periods approach disruption as something they DO rather than something they react to. They proactively introduce new products and models that replace their existing ones, even when those existing products are still profitable. They cannibalize their own revenue streams before someone else does it for them.
This is the core of what I share in my Big Little Breakthroughs framework: you don’t need to wait for a massive technological shift to disrupt your market. The most innovative companies generate a steady stream of deliberate, intentional innovations, each one building on the last, each one making it harder for competitors to keep up.
Apple didn’t stumble into removing the headphone jack from the iPhone 7 in 2016. That was a calculated decision by a market leader to destroy one of its own product standards (the 3.5mm jack had been standard for over a century) in order to accelerate the shift toward wireless audio. The technology for Bluetooth headphones already existed. What mattered was that a specific firm chose to force the transition.¹
The Firm, Not the Technology, Is the Unit of Disruption
This perspective, that disruption is driven by the behavior of specific firms rather than by technologies appearing out of thin air, has serious implications for how leaders should think about competitive strategy.
A research paper from Mario Coccia at Arizona State University titled Disruptive Firms makes this argument in a way that resonated with my own experience. In his study, Coccia argues that “one of the general sources of technological change is due to disruptive firms (subjects), rather than disruptive technologies (objects).”¹ His research, which examines case studies including Apple (as mentioned in this blog) and AstraZeneca, concludes that market-leading companies deliberately introduce new product generations designed to replace existing ones, and that this organizational behavior, not the technology itself, is what drives industrial and economic change.
That framing validates something I’ve believed for my entire career as an entrepreneur.
Technology is an ingredient, but it’s the firm’s willingness to act on it, bet on it, and force the market forward that actually creates the disruption. Most companies have access to roughly the same technologies. The difference is what they choose to do with them.
Building a Culture That Disrupts by Default
So if disruption is a choice rather than an event, the obvious follow-up question is: how do you build an organization that makes that choice consistently?
From my experience building and advising companies, it comes down to a few things.
- You need to reward cannibalization. Most companies punish the team that proposes killing a profitable product in favor of something unproven. Disruptive firms celebrate it. If your internal culture penalizes people for challenging the status quo, you’ll never be the one driving the disruption. You’ll be the one responding to it, usually too late.
- You need a high volume of small bets rather than a few big ones. This is the Big Little Breakthroughs principle in practice: the most consistently innovative companies don’t rely on occasional moonshot projects. They build systems that generate a constant flow of small innovations across every level of the organization. Some of those small innovations compound into major competitive advantages. But the system only works if the flow is constant.
- You need leadership that is genuinely comfortable with destroying what’s working in pursuit of what’s next. That kind of comfort comes from watching senior leaders actually make those decisions, repeatedly, even when the short-term numbers argue against it.
The Risk of Standing Still
I’ve watched this play out dozens of times across the portfolio of startups I’ve backed through my venture capital work. The companies that win are the ones with leadership teams willing to make uncomfortable choices before the market forces them to.
The companies that lose are almost always the ones that knew the shift was coming and chose to protect their existing business instead. They had the data and understood the trend, but they couldn’t bring themselves to disrupt something that was still generating revenue. By the time they moved, the window had closed.
Coccia’s research frames this as a Schumpeterian dynamic: disruptive firms pursue “path-breaking innovations in order to achieve and sustain the goal of a (temporary) profit monopoly.”¹ That word “temporary” is key. The profit advantage you earn from disruption is never permanent. It lasts only until the next firm makes the next bold move. Which means the only sustainable competitive advantage is the willingness to keep disrupting, including disrupting yourself.
If your organization is still treating disruption as an external threat to be monitored, you’re already behind. The most competitive companies in any industry are the ones that have internalized disruption as a core operating principle, not a response to crisis but a daily practice of questioning, challenging, and replacing what exists with something better.
That’s the competitive advantage that compounds. And in my experience, no other advantage comes close.
Frequently Asked Questions
Q: What does it mean to be a “disruptive firm” versus just using disruptive technology?
A disruptive firm doesn’t just adopt new technology. It makes deliberate organizational decisions to introduce products or models that replace existing ones, including its own. The distinction matters because the technology is usually available to everyone. What separates a disruptive firm is the willingness to act on it, even when that means cannibalizing something profitable. Apple didn’t invent USB technology, but it made the strategic call to drop the floppy drive from the iMac and force an industry-wide shift.¹
Q: How can a large, established company become more disruptive?
Reward employees who propose changes to profitable lines of business, even uncomfortable ones, and build a portfolio of small innovation bets across the organization rather than relying on a single R&D department. The goal is to make disruption a continuous process, not a one-time event.
Q: Does disruption always require massive investment or risk?
No, and that misconception holds a lot of companies back. Many of the most impactful disruptions start as small, targeted experiments that build on existing capabilities. The key is volume and consistency. One small innovation rarely changes the game. Dozens of them, compounding over time, absolutely can.
Q: What’s the biggest mistake companies make when it comes to disruption?
Waiting. The most common pattern I’ve seen, both as an entrepreneur and as a venture capitalist, is companies that recognized the need to change, had access to the technology to do it, and delayed action because the current business was still performing well. By the time the numbers started declining, the window for proactive disruption had passed and they were stuck playing catch-up.
Citations
¹ Coccia, M. (2017). Disruptive Firms. Working Paper CocciaLab n. 24, Arizona State University. arXiv:1710.06132.