Yesterday I spent the day with some pretty influential people and I noticed that their conception of disruptive innovation was vastly different. Several people in the room had budgets that stretch into billions per year - and yet because of their inability to grasp disruptive innovation that is surely going to be wasted.
The reason to pursue disruptive innovation is to ensure that your company has a future. The cycle of competitive advantage is shortening all the time. Apple brought out its disruptive combo of iPhone and iTunes only a few years ago in and have reaped the rewards for a while. Now the cycle has moved and for all their money they are slipping behind and their ability to produce innovation is doubted.
The meeting yesterday brought together some of the most influential players in a particular large market. It was interesting because it focused on a debate about the future of the industry. How different the incumbents were from the insurgents.
On the one hand, you had a large company that realised that agility is going to be key and was proposing to bring more of its partners’ capabilities in house. This is a company that employs about 106,000 people already. I wonder how they will achieve more agility by adding more workers. Interestingly there was a reference to WhatsApp with its 900 million subscribers and serviced by just 90 employees in just the next session. I think the irony was lost on many people.
The contrast that brought out the importance of disruptive innovation for me came a little later. A well-funded start-up talked about how it had managed to make disruptive change in India and since September has been signing up 1.5 million new customers per day. They are going for 100 million new customers in 100 days. That sounds like a huge game changing innovation and a complete disaster for their competitors who are still stuck in the old model.
Amazing as that story is, it is not unique. We are living in an age where the most disruptive capability is exponentiality. If you can have exponentially more customers than you have employees, you win. If you can take on exponentially more new customers than your competitors, you will win.
Not easy you say – very true – but it is totally possible. Companies are doing it all the time. And the way they are doing it is by looking for disruptive not incremental innovations.
The Great White Hopes
Part of the meeting yesterday was dedicated to the great white hopes of the industry. There are two of them. One is a technology to deliver more capacity – the only problem is that there is only a vague understanding about how this extra capacity will benefit customers. There is certainly no connection between the investment necessary and the willingness of the consumers to pay for the service. This is a pretty classic example of sustaining innovation stretching beyond what customers want. Companies are looking to provide the enhanced capabilities because they can’t think of anything else to do.
At the same time the other hope is to dominate the Internet of Things (IoT) market. Use cases of IoT were discussed and some of the possibilities were proposed. Unfortunately, the elephant in the room remains that the industry is not actually at the IoT table in any real way. The capability of the industry is important to IoT but frankly most of what will be necessary can be achieved already – and with no need to involve anyone in the industry. The problem here is product innovation. Collectively the industry is looking to produce products that need screws because they own the screwdrivers. Disruptive innovation would be a better path. Starting from the job that the customer wants to get done, or better still, will want to get done in the future, and working back from there.
Interestingly people in the audience instinctively know this but they are not jumping on it. It feels that they would rather try to align themselves with IoT because it is a thing… because other people are piling in. I felt the need to raise a sign and say “No, wrong way… don’t go after what exists… be disruptive, invent the future that your customers want. I know that means taking a risk and changing the paradigm of what is acceptable today. But that is where the profit lies.”
Survival and Growth
The benefit of disruptive innovation for companies and industries is survival and growth. Unfortunately, the road there is risky and the people within corporations mostly don’t care to take risks. For those people innovation equates to bets on making their products a bit better, whether the customer wants it or not. Or doing the same as everyone else and bringing out “me too” products. However, there are exceptions. People who embrace disruptive innovation and seek it out. Best to find them, or be them, before your industry starts to fail.
If this makes sense to you, you may be an innate disruptor. If you feel the risk is a challenge and you are passionate about making a big difference your time is coming. We will be writing about the emergence of “disruptors” in future articles, but in the meantime take a disruptive step and register to learn more about the Ecosystem for Disruptive innovation that is PathFinder4.