Disruptive innovation is the upside of digital transformation. Digital transformation has emerged as the catch-all phrase for companies wanting to evolve either their business model or operations to stay relevant in the digital age. While it offers the opportunity to join the digital race, it doesn't say much about innovation nor disruption.

Digital disruption entails established companies and startups alike enlisting new technologies in the fight to dislodge incumbents, protect entrenched positions, or re-invent entire industries and business activities. And to remain disruptive in the market, it is important to keep innovating. This is crucial because, innovations occur now and then in every industry, however, to be truly disruptive, an innovation must entirely transform a product or solution that historically was so complicated only a few could access it.

On a minimum level, digital transformation enables an organization to address the needs of its customers more simply and directly. But through disruptive innovation, companies can offer a far better way to users of doing things that current incumbents simply cannot compete with.

For instance, UBER is one of the best examples of how disruptive innovation pays in the longer run. When UBER was launched in San Francisco, its customers were already using taxis, so it didn't exactly target non-consumers. Also, Uber wasn't a low-end alternative to a complicated, costly, inaccessible service. It actually originated in a mainstream market first (luxury black cars), and then increased overall demand and appealed to lower-end segments later with ride-sharing options. Eventually, the taxi industry was genuinely disrupted because UBER offered its customers, a substantially greater value, without even being in the same industry.

Pursuing digital innovation also doesn't mean overnight success. It requires consistent effort. To exemplify this, let's consider how Wikipedia disrupted traditional encyclopedias such as the Encyclopedia Britannica. In case of traditional encyclopedias, people had to wait for a year or two for revised editions and the hardcover prints were quite expensive. On the contrary, Wikipedia had constantly updated content, that doesn't require readers to wait and is cheaply accessible – factors which helped it win over an established and recognized incumbent.

Irrespective of the business domain, there will always be disruptors and the disrupted. The reason behind this distinction is opting to innovate. For instance, today, the music industry, the streaming, P2P and a host of different payment models are converging to create a new business paradigm. There will be niches like vinyl that can still be a profitable business opportunity e.g. revival of vinyl trend. Meanwhile, streaming apps like Spotify have succeeded both as a brand and as a business model – highlighting the need to look at things from newer perspectives. Leverage disruptive technologies like big data, artificial intelligence if needed. But it is important to remember that not all innovations are disruptive.

Though disruptive innovation is about strategically allying with customers to introduce them to looking outside the product experience, there are few key characteristics that can help an organization have a leading edge. These are analyzing the competition, finding alternatives that connect with the downtrodden, ignored or non-customers, making appealing products, services and meticulously selecting the market battles. When the digital market becomes a high-growth industry built on the foundations of disruptive innovation, digital disruption is imminent and highly effective.

It is natural to feel left out amid the hype of missing the digital transformation wave. But focusing on bringing or encouraging a disruptive and innovative outlook can yield more profits when pursued side-by-side of digital transformation.