I focus mostly on the disruptive innovations in the technology space ( in keeping with my editorial policy) , and talk about my understanding of the underlying reasons for disruptive innovations seen in the world over the last few years.
The term ‘disruptive innovation’ has been used to describe innovation that is of highly revolutionary or discontinuous nature, in which customers and consumers embrace new paradigms in favour of the old. To begin to understand disruptive innovation it is useful to consider some examples such as the light-bulb industry’s disruption of the candle industry and the desktop computer industry’s disruption of the mainframe and minicomputer computer industries.That firms need to periodically engage in the process of revolutionary or disruptive innovation for long-term survival is well-recognised. Many companies can and do spend heavily on technology development and market research, however, almost all investment is devoted to evolutionary innovations that make current offerings perform better in ways customers already value. Few organisations understand or have established track records for undertaking successful disruptive innovation, in fact most are reluctant to follow this path and find themselves disadvantaged by embedded structures, capabilities and outlooks. The desire to maintain a stable and efficient context to satisfy mainstream market demands, forces many organisations into a focus on the ‘familiar’, the ‘mature’ and the ‘proximate’. Thus most organisations fall into learning traps preventing them from ‘exploring’ potentially disruptive ideas .
If an organisation manages to foster a potentially disruptive idea, not only does it often face huge problems getting internal support but there are massive obstacles to overcome to get it adopted by the mass market.
New paradigms represent discontinuities in trajectories of progress as defined within earlier paradigms - where a technological paradigm is a pattern of solutions for selected technological problems . In fact, new paradigms redefine the future meaning of progress and a new class of problems becomes the target of normal incremental innovation. Thus for a discontinuous innovation to be disruptive, successful exploitation is vital, which, results in significant transformation of the mainstream market and its value proposition.
The extent of disruption that major breakthroughs cause can be broken down into subgroups of ‘product’ and ‘process’, furthermore, these can be either ‘competence destroying’ or ‘competence-enhancing’. Competencedestroying discontinuities are highly disruptive, requiring new skills, abilities and knowledge, are initiated by new entrants – or spin-off companies. They increase environmental turbulence and market uncertainty, usually delivering a new product class, a significant product substitute or a radical new way of making a product. Alternatively, competence-enhancing discontinuities “represent an order-of-magnitude improvement over prior products, yet build on existing know-how”. They are associated with little or even decreased environmental turbulence and reduced market uncertainty. Thus, disruptive innovation occurs in both products and processes and is at the extreme end of the continuum of discontinuous innovation.
The system level is where the real benefits of ‘non-linear’ or disruptive innovation can be found. He states that organisations can disruptively innovate with products or services but the real value is only unlocked when the larger system is factored into the disruption. By unpacking the ‘business model’ and exposing it to disruptive thinking, Hamel states that ‘Business Concept Innovation’ occurs and that this is the real essence of revolutionary innovation, causing disruption to preconceived ideas, markets and entire value networks.
Thus, revolutionary innovations fall onto a continuum ranging from ‘radical incrementalism’ – that delivers significant change to the mainstream customer which, is mostly competence enhancing with low environmental turbulence and low market uncertainty - to ‘disruptive innovations’ – that deliver transformational change to the mainstream market and its value attributes which, are mostly competence destroying with high environmental turbulence and high market uncertainty.
No comments:
Post a Comment