Disruptive Innovation Explored

March 3, 2013  |  Disruptive Innovation

Official disrupt it logoThis paper was the result of an EC funded project on disruptive innovation (DISRUPT IT).  It was an intensive three year project with multiple European partner organisations that enabled us to collect a lot of data about how they were dealing with disruptive opportunities within their organisations.  It also enabled Pete Thomond to get his PhD and become a leading innovation expert and consultant with Clever Together and Sport Inspired.

One of the interesting first activities of the project was to try to define what disruptive innovation is.  Many authors have written about it and used different ways to talk about it.  This paper explored what other researchers were saying about disruptive innovation and used this to define what disruptive innovation meant to us.  This then guided our research on the topic and still underpins our work in other areas like social innovation.

Thomond P and Lettice F.  2002.  Disruptive Innovation Explored, 9th IPSE International Conference on Concurrent Engineering: Research and Applications (CE2002), July, Cranfield University, UK

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Downloadable pdf

We found a number of different terms being used to mean essentially the same thing – a more revolutionary type of innovation – the opposite of sustaining or incremental innovations.  Some of these terms include: discontinuous, disruptive, radical, non-linear, breakthrough, and paradigm-shifting.

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We were interested in how research in the area has developed over time and how this might help with defining disruptive innovation.

Clayton Christensen in his influential book The Innovators Dilemma (1997) had identified that emerging or niche markets that had not been satisfied by existing products and technologies, but had a potential to disrupt or threaten key players in mainstream markets.

Earlier, Tushman and Anderson (1986) had usefully split discontinuous innovations into 2 categories:

(1)    Competence-enhancing discontinuities – These give an order of magnitude improvement over prior products, but they basically build on existing products and know-how.  They are usually initiated and delivered by existing firms in that sector.

(2)    Competence-destroying discontinuities –  These deliver a new product class, a significant product substitute or a radical new way of making a product.  They require new skills, abilities and know-how and are often initiated by new entrants or spin-off companies.

Veryzer (1998) made a useful distinction between “product capability” (the benefits of products as perceived by customers and users and “technological capability” (the degree to which a product involves expanding capabilities beyond existing organisational boundaries).  Organisations can therefore deliver three types of discontinuity:

(a)    Commercially discontinuous – for the organisation the technological capability is the same but the product capability is enhanced.  An example of a product in this category is the Sony Walkman

(b)   Technologically discontinuous – the product capability is the same, but the technological capability is enhanced.  An example here is the move from cathode ray to flat screen TVs

(c)    Technologically and commercially discontinuous – both the product and technological capability are enhanced, for example with the shift from vinyl to CDs to mp3 technologies and related products.

Hamel (2000) suggests that it is at the level of the system that the real benefits of disruptive innovation can be found.  The business model needs to be unpacked and exposed to disruptive thinking.

For our project, we defined a disruptive innovation as: “a successfully exploited product, service or business model that significantly transforms the demands and needs of a mainstream market and disrupts its former key players”.

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But there are also some common pitfalls to successful disruptive innovation:

(1)    Existing organisations often focus primarily on the familiar and on exploiting existing products.  They struggle to explore potentially disruptive opportunities, focusing on incremental or mildly radical innovations instead.

(2)    Standard market research techniques provide little or no benefit for exploring the potential of disruptive ideas and can even obstruct radical idea development.

(3)    If internal support can be found, the mass market needs convincing to adopt the innovation.  Moore (1995) highlights the difficulties of crossing the chasm from early market acceptance to get the product or change more widely adopted by the mainstream market.

In the next post, there will be some examples of techniques that organisations can use to help them to pursue disruptive innovation opportunities and overcome the common pitfalls to successful disruptive innovation.

References

Christensen C M. (1997) The Innovators Dilemma: When New Technologies Cause Great Firms to Fail, Harvard Business School Press, Boston, Massachusetts.

Hamel G (2000) Leading the Revolution, Harvard Business School Press, Boston, Massachusetts.

Moore G A (1995) Inside the Tornado: Marketing Strategies from Silicon Valley’s Cutting Edge, HarperCollins, New York.

Tushman M L and Anderson P (1986) Technological discontinuities and organisational environments, Administrative Science Quarterly, 31, pp 439-465.

Veryzer R W (1998) Discontinuous Innovation and the New Product Development Process, Journal of Product Innovation Management, 15, pp 304-321.