Theranos, disrupted: The death and life of a buzzword

by Edward Cone

Disruption would not be a bad title for one of the many books and screenplays that will be written about Theranos.

Elizabeth Holmes

You’ve got a company that was built to disrupt a sizable chunk of the healthcare business, but ended up disrupting itself, at a moment when captains of industry tremble at the thought of being disrupted by startups with disruptive technologies.

Theranos founder Elizabeth Holmes, pictured in happier times at a conference called (of course) Disrupt, was a fan of the d-word herself.

There is just so much disruption going on! Throw in some transformation and sprinkle a little digital on top, and you’ve got a delicious word salad that the tech/finance/media complex can dine out on for years.

Now, mocking Silicon Valley hucksterism is appropriate and fun, but the Theranos meltdown should not be understood as a signal for established companies to relax.

Disruption really is coming to healthcare and other industries.

Whatever disruption may mean.

Here’s Clayton Christensen, who coined the term “disruptive innovation” long ago, arguing that Uber—widely held to be the poster child for disruption—is not actually a disruptive company. He makes a cogent-if-narrow argument, based on his own foundational parameters, which require disruptors to begin with either low-end alternatives to superior technologies or to create new markets.

By that definition, Uber doesn’t qualify and Theranos wasn’t really playing the disruption game, either.

But wait, here’s Michael B. Horn, a co-founder and distinguished fellow at the Clayton Christensen Institute for Disruptive Innovation, arguing that Uber actually is a disruptive company, even by the orthodox standards of the mother church.

Christensen is more convincing. It doesn’t matter: Nobody owns a word once it’s been released into the wild, and vernacular usage has come to define disruption as any major, tech-driven upset of an established industry. The original meaning is now a subset of the larger phenomenon. And disruption clearly presents a threat to all kinds of business models.

So: Theranos is many things—cautionary tale for star-struck investors and journalists, rebuke to techno-libertarianism, schadenfreude machine—and you can include “would-be disruptor” on the list.

“Disruptive innovation” is overused, harder than it looks, and far from over.

Edward Cone is Deputy Director of Thought Leadership at Oxford Economics.