Why Disruption Always Starts as a Joke (And What That Means for Your Business)
Quick answer: Why does disruption always start as a joke? Because the early version of any disruptive idea looks laughably inadequate compared to what already exists. Incumbents dismiss it based on what it can't do yet not on what it will be able to do. By the time the threat is obvious, it's usually too late to respond effectively.
There's a pattern I've watched play out across two decades of working with leadership teams at Fortune 500 organisations through 12 years at Deloitte Consulting and thousands of hours on stages from global healthcare conferences to government summits. It goes like this.
A new technology, business model, or competitor appears. The people in the room were experienced, well-informed, genuinely smart, looked at it and laughed. Not mean-spirited laughter. Reasonable laughter. Because the thing genuinely is bad. It's slower, cheaper, less reliable, more limited. Compared to what they've built, it's a toy.
Then, three to five years later, it's not funny anymore.
This is one of the most consistent and consequential patterns in business history. And understanding why it happens is more useful than any list of disruptive trends you could read this week.
The joke isn't random it's structural
Clayton Christensen described the mechanics of disruption decades ago, but the insight still doesn't translate into organisational behaviour the way it should. The early version of a disruptive product is almost always legitimately inferior on the dimensions the incumbent cares about. It serves a smaller market, a simpler use case, a customer who can't afford the full solution.
The incumbent looks at it correctly. It's not a threat to their best customers. It's not competitive in the high-margin segments that matter most. By every rational measurement system they have, the threat doesn't register.
That's not a failure of intelligence. It's a failure of measurement. The incumbent is evaluating the new entrant on the dimensions that made the incumbent successful not on the trajectory the new entrant is on.
The incumbent is evaluating the new entrant on the dimensions that made the incumbent successful not on the trajectory the new entrant is on. That's the mistake.
This is why the joke is structural. The laughter is generated by a measurement system that is perfectly calibrated for the present and completely blind to the direction of travel.
Real examples what the joke sounded like
The pattern repeats so reliably that you can almost set your watch to it. A few illustrations:
Streaming video
When streaming first emerged as a distribution model for video content, the quality was mediocre, the library was thin, and the experience was frustrating. The idea that people would cancel cable subscriptions in favour of watching compressed video on a laptop was, to most incumbents in 2007, a joke. The content wasn't there. The infrastructure wasn't there. The user experience wasn't there. All of those assessments were accurate. None of them factored in the rate of improvement.
Mobile photography
The first iPhone camera was 2 megapixels. Professional photographers and camera manufacturers had entirely reasonable objections. The image quality was poor, the controls were limited, and no serious creative professional would replace their equipment with a phone. Those objections were technically correct. They also completely missed the fact that the phone was always in your pocket, and that would ultimately matter more than any camera spec.
Online retail
For years, the conventional wisdom in physical retail was that people would always want to touch and try products before buying them. Online retail was a niche for books and electronics. Clothing, furniture, and luxury goods would never work. Those predictions were based on where online retail was, not on where it was going.
What's notable about each of these examples is that the dismissal wasn't irrational. The laughter was earned by the early product. The problem wasn't the assessment of the current state, it was the inability to model where the trajectory would lead.
Why smart organisations keep making this mistake
Success is a focusing mechanism
When you've built something that works a distribution system, a customer relationship, a manufacturing process, a brand your entire organisation is optimised to protect and extend it. Every dollar of investment, every hour of senior attention, every performance metric is calibrated around what is working. That's not dysfunctional. That's how well-run organisations behave.
The problem is that this optimization creates a perceptual filter. Information that supports the existing model gets amplified. Information that challenges it gets discounted. The new entrant doesn't just look small, it gets classified as irrelevant by a system that is actively selecting for evidence of what already works.
The people raising the alarm are wrong about the timing
One of the cruellest aspects of disruption is that the people who spot it early are almost always wrong about when it will matter. Internal advocates for taking a new threat seriously often overshoot on urgency. They predict tipping points that don't arrive on schedule. When those predictions don't pan out, they lose credibility and the organisation learns the wrong lesson. The right conclusion is 'the timing was off.' The conclusion that actually gets drawn is 'the threat was overstated.'
Disruption is a threat to the business model, not the product
Most organisations evaluate new threats by asking 'is this as good as what we do?' That's the wrong question. A more useful question is 'does this undermine the reason customers pay us what they pay us?' The streaming service doesn't have to be as good as a cinema to make the cinema less relevant. The online retailer doesn't have to match the in-store experience to change what customers expect and where they go by default.
This reframing from product quality to business model threat is something I've spent years helping leadership teams develop. It's one of the central arguments in The Bold Ones, and it's the lens that separates organisations that navigate disruption from those that get surprised by it.
What to do with this in practice
Understanding the pattern is one thing. Building an organisational capability to act on it is another. A few things that actually work:
Evaluate threats on their trajectory, not their current state
When a new entrant or technology appears, the most useful question isn't 'what can it do today?' It's 'at what rate is it improving, and what will it look like in three years if that rate continues?' This requires discipline; the current state is concrete and visible, the trajectory requires a mental model that most organisations haven't built.
Assign someone to take the threat seriously
The job of most senior leaders is to protect and extend what's working. That makes them structurally unsuited to evaluate threats to the current model. If nobody in the organisation is assigned to genuinely believe in the threat and argue for it as strongly as possible, the dismissal will win by default. Creating an adversarial role someone whose explicit job is to make the strongest possible case for the disruptive scenario is not alarmist. It's necessary.
Watch what your most price-sensitive or underserved customers are doing
Disruption almost always enters at the edges the customers who can't afford the full solution, who are overserved by the current offering, who have been tolerating a bad experience because the alternative didn't exist yet. Tracking behaviour at the margins of your customer base is often an earlier signal than anything happening in your core market.
Run the uncomfortable scenario
Most organisations run scenarios about how the market will grow and how they will capture that growth. Very few run the scenario in which a specific entrant takes a specific percentage of their market and asks: what would have to be true for that to happen, and is any of it already true? Running that exercise explicitly not as a theoretical exercise but as a genuine strategic input is the difference between organisations that are surprised and organisations that are prepared.
Disruption doesn't care about your market share today. It cares about the assumptions your business model depends on and whether those assumptions are still true.
The AI disruption joke is already being told
Right now, there are conversations happening in boardrooms and strategy meetings where someone is describing what AI will do to a specific industry or function, and someone else is explaining why it's not there yet. The quality isn't good enough. The reliability isn't there. The regulatory environment won't allow it. Customers won't trust it.
Some of those objections are technically correct. None of them are asking the right question, which is: at what rate is this improving, and what does my business model depend on that this trajectory threatens?
After delivering over 500 keynotes on innovation and disruption including the Innovation in a World of AI keynote specifically built for leadership teams navigating this moment, the organisations I most worry about are not the ones that are sceptical about AI. Scepticism is healthy. I worry about the ones that are dismissing it on the basis of what it can't do today.
Those are the organisations telling the joke. They're the ones who will be explaining themselves in five years.
The Bold Ones keynote is built around this exact dynamic why organisations that have been most successful often have the hardest time seeing what's coming next. If your leadership team is navigating a disruption question right now, you can explore the keynote here or get in touch directly to discuss how it can be tailored to your industry and audience.
Frequently asked questions
Why do successful companies fail to respond to disruption?
Successful companies fail to respond to disruption not because they're poorly managed, but because they're well-managed for the wrong problem. Every system, metric, and incentive is calibrated to protect and extend what's already working. New threats that look small today which they always do at the start don't register as real through those filters. The result is rational behaviour that produces catastrophic outcomes.
What is the Christensen disruption theory and does it still apply?
Clayton Christensen's theory of disruptive innovation describes how new entrants typically start by serving underserved or less demanding customers with a simpler, cheaper, lower-quality product and then improve along a trajectory that eventually makes them competitive with the incumbent's core offering. The theory is more relevant than ever, but requires updating: the improvement curves for AI-enabled products are dramatically steeper than in previous disruption cycles, which means the window between 'toy' and 'threat' is collapsing.
How can organisations spot disruption earlier?
Watch the edges of your customer base: the price-sensitive, the underserved, the ones tolerating a bad experience because no alternative exists yet. Watch what's improving fastest in adjacent technologies, not what's best right now. And assign someone whose explicit job is to argue for the disruptive scenario as strongly as possible. The goal is to build a credible internal case before the market makes it undeniable.
Is the AI disruption wave different from previous disruption cycles?
Yes in one important way. The improvement rate is faster. Most disruption cycles allow a window of several years between the 'joke' phase and the 'serious threat' phase. AI is compressing that window significantly. Capabilities that were clearly inadequate eighteen months ago are competitive today. Organisations that have historically had the luxury of a 'wait and see' posture on new technology are finding that posture much more dangerous in the AI era.
Who is Shawn Kanungo and why does he speak on disruption?
Shawn Kanungo is an innovation strategist, keynote speaker, and bestselling author of The Bold Ones ranked #5 on McKinsey & Company's Top Books on Decision Making. He spent 12 years at Deloitte Consulting as Senior Manager, Strategy & Innovation, working with Fortune 500 leadership on exactly these questions. Forbes named him 'The Best Virtual Keynote Speaker I've Ever Seen.' He is the first innovation expert with a streaming special on Apple TV and Amazon Prime Video.