We recently had the opportunity to spend two days with Clayton Christensen and George Gilder at the Disruptive Innovation Conference in Vancouver. Disruptive Innovation involves the ability to use a technology to create an infrastructure revolution which substantially alters the cost structure of a product or industry. Today the Internet is enabling the use of technology to "disrupt" well-established industries, allowing a "reach" never before envisioned which brings a product to an infinitely larger pool of users at a lower price.

Christensen and Gilder cited ten industries as posed for significant disruption: online financial services, IP telephony, online retailing, mobile telecommunications, hand-held digital appliances, microprocessors, distance education, PC software, fuel cells and microturbines, and managed health care.

The session brought together an interesting mix of executives from well-established industries as well as those with breakthrough business models. The leaders made the following key points:

1.		Most successful startups will experience a complete shift from their original strategy as they bring their product to market -- the challenge is to sustain financial resources through the migration.
2.		The fundamental competency required to build a disruptive product is marketing -- understanding in an intimate way your customer's needs and bringing them a radically different solution to that need.
3.		Executives should never underestimate the power of conventional thinking and should make their cultures one in which challenge is valued.
4.		The drive for more complex, faster, personal computing is disappearing. The PC will be replaced by appliances that disintegrate functionality and create modularity. Example, the Palm Pilot and the SmartPhone.
5.		"To prevent your market from being disrupted you must watch the low end of your market -- who isn't using your product anymore? Markets that are over-served in terms of functionality, and populated by large, complex, centralized products and services are vulnerable to attack," said Christensen.
6.		The Internet is fundamentally altering cost structures by changing the way industries market and distribute their products. No industry is immune to this disruption, so keep your eyes open for the "sneak attack" -- make certain your company has its strategy clearly in focus.