Andy Rachleff:

Tesla has built new cars that I think are tremendous, but the company is not disruptive. It doesn’t address consumers who can’t solve their current problems with existing cars, and its cars are not far less expensive than the incumbents’ cars.

Kayak went public a few months ago and is thought by many to be disruptive. While it’s a better service than alternative travel sites, it is not disruptive by the Christensen definition, because it is not uneconomic for the incumbents to respond (and many have).

Business models, not products, are disruptive. People sometimes say a technology is disruptive. It’s more appropriate to call the business model disruptive. In order for a company to disrupt, the revenue and cost structure of the incumbents that the company faces must keep them from responding. It’s easy for other companies to add Kayak-like technology to existing products. The business model, not the technology, usually determines whether it is uneconomic for the incumbent to pursue the disruptor.

The technology is the most visible part of disruption, but it is usually a symptom, not the cause of it. With a technology on it’s own, you can get paying customers, but it’s not until you start better serving the job to be done of your competitors that you will disrupt them.

A lesson to startups is that while focusing on building a great product is admirable, you can succeed with a “good enough” product whose economics work out more favorably.