How does one disrupt an industry?

Well actually, why would you want to disrupt anything?

The idea of disruption has changed significantly since Clay Christensen first used the term “Disruptive Innovation” in The Innovator’s Dilemma. He originally described how a startup with an inferior but cheaper product can evolve to eventually take the market from an incumbent. But now we just talk about disruption as if it is the goal.

You would be better served by creating your own industry instead. Then you don’t have to disrupt anything. In fact, if you follow the principles described in The Innovation Stack, you can keep the new industry mostly to yourself. Why spend your efforts attacking existing players with massive resource advantages when there is uncontested ground at the bottom of every market?

If you look at the history of companies who build new markets for themselves, a strange pattern emerges. They tend to serve customers who are not being served at all, usually because they cannot afford the product or service in question. The challenge, of course, is that to serve these new customers, you will have to do things differently than everyone else in the industry. What we did with the credit card acceptance market at Square is a great example of the power of focusing on the smallest customers. But we are by far the only example. Actually, I think what Southwest Airlines did to air travel is an even better case study since more people have traveled on airplanes than accepted credit cards.

There is no magic formula, but I’ve seen the following pattern occur in almost every industry I studied. The entrepreneur begins by trying to serve customers who have been excluded from the market entirely. Since the market has no systems to serve these customers, the entrepreneur cannot copy the incumbents and is forced to invent a new set of tools. These new tools, which I call an Innovation Stack, begin to evolve into an entire system that eventually expands the market. The entrepreneur then has this market to him or herself.

No disruption necessary.

Originally published on Quora.

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