SmileDirectClub (SDC), an American teledentistry company once valued at nearly $9 billion and poised to disrupt the traditional braces industry, went bankrupt in December 2023. SDC offered a breakthrough solution for teeth straightening. With the price (originally some $1,800 vs. the standard $3,000-$6,000), the time of treatment (6 months vs. around 2 years), no required office visits, plus clear aligners you can slip on and off, it is not surprising that SDC took off.  Since its founding in 2014, a customer base of 2 million people opted for SDC vs. traditional braces.

What led this innovative company to shut its doors after such phenomenal growth?

The initial success of SDC’s huge customer pull away from dentist professionals seems to have boomeranged. Threatened by the SDC’s disruptive move, dentists allied with regulators and rallied against SDC. They challenged SDC’s quality and safety of care, sparking lawsuits, regulatory investigations, and with that, negative attention in the media.

The high cost and time of legal disputes coupled with a massive advertising expense to mitigate reputation damage and attract new customers, resulted in mounting debt. Four years after going public in September 2019, SDC’s swelling debt ultimately led to its downfall.

Managers should recognize that when it comes to innovation and growth, disruption is not the only path

Disruption is often intuitively appealing to managers and entrepreneurs, as the industry to be disrupted provides a clear target of a known market size and deals with a known need for which people have demonstrated a willingness to pay.

However, as SDC shows, targeting the core of an existing industry with disruptive solutions often invites strong resistance and direct confrontation from well-entrenched incumbents and other vested interests. Companies that want to disrupt should be prepared for this, both mentally and strategically.

Managers should recognize that when it comes to innovation and growth, disruption is not the only path. Creation without disruption or nondisruptive creation is about creating a new market outside or beyond existing industry boundaries, and has its own organizational and business advantages. Let’s run through them.