A642.7.3.RB - Leading through Disruptive Times
What exactly classifies innovations as incremental or
disruptive within and across organizations? The term disruptive innovation is
frequently misused. Organizations tend to describe innovations as disruptive
when they make a huge organizational impact such as a dramatic increase in
revenue or increased customer consumption or traffic.
Innovation and disruption are similar in that they are both
makers and builders. Disruption takes a left turn by literally uprooting and
changing how we think, behave, do business, learn and go about our day-to-day. (Howard, 2013)
Innovation –
changes to an existing product, service, or process that has a significant
impact on the business. For example, it could open a new consumer category for
the business, or change the way existing customers interact or perceive the
organization. This innovation results in a company leapfrogging ahead of its
competitors – but the innovation originates from core organizational offerings.
Disruptive Innovation –
new products or services that enter at the bottom of the market and overtime
move up and displace established market leaders.
There are three important qualities of disruptive innovation
to note:
·
The
new product or service enters at the bottom of an established market.
·
It
begins as a substandard product that is not seen as a threat by established
market leaders.
·
Adopters
are “non-consumers”, who couldn’t access product or service previously because
of cost or accessibility.
The innovation becomes truly disruptive when adoption becomes
more widespread, it improves in quality, and finally reaches tipping point with
established market leaders waking up one day to realize that their market share
has slipped away and there is no way to get it back. Examples of disruptive
innovation include: the digital camera, mini mills, personal computers,
peer-to-peer business models such as AirBnB and Uber.
The difference between sustaining technologies and disruptive technologies, both are innovative, but there is a huge difference and advantage to having both. Sustaining technology improves a product or service in ways that the market does not expect, typically changing designs to address different consumer sets or by allowing a lowering of prices in more mature markets. A disruptive innovation is helps create a new market or value chain and eventually disrupts an existing market. Disruption is much more substantial than sustaining innovation because it changes how we think, behave, do business, learn, and go about our day-to-day. Harvard Business School professor Clayton Christensen says that a disruption displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative.
In today’s market disruption seems to be short-lived. It is critical that not go bankrupt trying to create a innovative idea and there have plenty of capital behind it to take advantage of the position once the opportunity. Speed is also essential. Take the Airbnb example. Given that that the primary key to their success was a website to match hosts and travelers, scaling up quickly to have the largest inventory on a global basis with a lot of traveler traffic to their website was essential. Moving early and fast allowed them to build their brand and presence with no marketing budget. They built their entire empire through social media. The value of their innovation and how they approached is the exception and is what all disruptors should seek to accomplish.
The difference between sustaining technologies and disruptive technologies, both are innovative, but there is a huge difference and advantage to having both. Sustaining technology improves a product or service in ways that the market does not expect, typically changing designs to address different consumer sets or by allowing a lowering of prices in more mature markets. A disruptive innovation is helps create a new market or value chain and eventually disrupts an existing market. Disruption is much more substantial than sustaining innovation because it changes how we think, behave, do business, learn, and go about our day-to-day. Harvard Business School professor Clayton Christensen says that a disruption displaces an existing market, industry, or technology and produces something new and more efficient and worthwhile. It is at once destructive and creative.
In today’s market disruption seems to be short-lived. It is critical that not go bankrupt trying to create a innovative idea and there have plenty of capital behind it to take advantage of the position once the opportunity. Speed is also essential. Take the Airbnb example. Given that that the primary key to their success was a website to match hosts and travelers, scaling up quickly to have the largest inventory on a global basis with a lot of traveler traffic to their website was essential. Moving early and fast allowed them to build their brand and presence with no marketing budget. They built their entire empire through social media. The value of their innovation and how they approached is the exception and is what all disruptors should seek to accomplish.
A company’s number one priority should always be focused being a leader industry when it comes to innovation. If innovation is not a priority focus then your business is stagnant, and careful attention needs to be placed because someone will catch up to the organization and disrupt the innovation process. “If you can determine how effective or ineffective the disrupter is likely to be at doing the jobs you currently do, you can identify the most vulnerable segments of your core business—and your most sustainable advantages”.
References
Canfield, J., & Smith, G. (2011). Imagine:
Ideation skills for improvement and innovation today. Holland: Black Lake
Press.
Howard, C. (2013, March 27). Disruption Vs.
Innovation: What's The Difference? Retrieved from Forbes:
https://www.forbes.com/sites/carolinehoward/2013/03/27/you-say-innovator-i-say-disruptor-whats-the-difference/#6ea88db06f43
McKeown, M. (2014). The Innovation Book. In M.
McKeown, The Innovation Book (pp. 33-58). London: Pearson.
Wessel, M., & Christensen, C. (2012, December). Surviving
Disruption Maxwell WesselClayton M. Christensen. Retrieved from Harvard
Business Review: https://hbr.org/2012/12/surviving-disruption
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