Solving the Innovator's Dilemma
There's a question that I'm frequently asked that goes something like "So, I've read/heard about the Innovator's Dilemma and disruptive innovation. I get it -- interesting idea -- we all need more innovation. But what difference does it make whether innovation is disruptive or not? What can I do about it / how can I use it?"
Generally, the question is posed as a challenge -- a conversation starter when people are trying to understand what I do for a living and whether my services have any relevance to them. Sometimes it is the challenge of a skeptic: someone who doesn't believe disruption theory is valid, and they're looking for logical holes to punch through.
Normally, I use this space to discuss causes and effects of disruption, and case studies and disruption analysis that (I hope) is instructive and interesting. But my business is more than an intellectual exercise, so today I'm going to address this question head-on, and I hope you'll excuse if a tiny bit of selling creeps in. Hopefully, you won't even notice.
Why We Care About Disruption
In a nutshell, disruptive innovation catches competition off guard, and leaves them without adequate response. If you could design it as an attribute of your business, it is the ideal strategy, because it creates new markets, satisfies needs that are unmet or underserved ("Blue Oceans") by existing solutions, and determines who the dominant players with the highest margins will be for years to come.
Where They Ain't
"I skate to where the puck is going, not to where it is," is a quote famously attributed to Wayne Gretzky, the greatest hockey player ever. He was explaining to a reporter why he always seemed to be in the right place at the right time, and to have the best and easiest scoring opportunities.
Going where the puck isn't is the essence of disruptive innovation. If you solve the problems that no one else is solving (and that potential customers are willing to pay to have solved), at order-of-magnitude lower cost, and with the highest degree of simplicity and convenience, then you'll generally have a disruptive innovation on your hands.
The trouble is, how do you find those sweet spots in your industry, or in your business? It's easy to see the next incremental step in innovation -- make the 'off button' bigger and red, make the product smaller, add another function (whiteners in your detergent). But going in a contrary direction, or one that others don't see the need to, is a lot harder to do. For that, you have to ask the right questions, and I know, that's also easier to say than do. Unless you are starting with the right framework or lens for examining what people really need.
Apart from the natural resistance that many have to stepping out of line and being different, this is what is so challenging about disruptive innovation, and why disruption is so rarely initiated from within the industry being disrupted. Regardless, to be disruptive, you have to hit the competition "where they ain't" (see "Wee Willie" Keeler), and do it in a way that isn't possible for market incumbents to match easily.
Identifying the Value
As a disruption consultant, the principle benefits my clients identify with implementing a disruptive business strategy or disruptive business model include:
- creation of new revenue streams
- easier sales
- much higher than average margins
- lower cost of doing business
- larger markets and largest market shares
Coincidentally, when you achieve those things, you also create the positive perception of being a trendsetter, an industry (market and/or thought) leader, and a supplier who is better able to serve your customer's needs. So, those are the simple surface answers to the questions raised in the first paragraph, but there is a deeper underlying question of how that opportunity can be leveraged. How do we create value from disruption?
I don't want to spend time here describing the services Innovative Disruption offers as a consultancy -- you can visit the pages of our website for that information. Simply understand that creating disruption and leveraging its value is done through a number of deliberate tactics, and that this process can be learned. Some of the key activities and priorities include:
- identifying "jobs to be done"
- radical simplification (of products especially)
- dramatic improvement in accessibility, flexibility and/or convenience
- change that enables nearly the same product/service to be done (or a "good enough" facsimile) for a fraction of the price
- find ways to bring products to, or service market niches that are undesirable to incumbents
and, these are accomplished with a methodological framework, specialized analysis tools, Disruption Report Cards, and a mentality that experimentation and (fast) failure is part of the lifecycle of product introduction to be embraced because it is necessary to establishing product/market fit, not something to be punished. Lean startup behavior, in other words, is compatible with disruption (though neither necessary nor sufficient to create it).
Eat, or Be Eaten
We increasingly face a world where everyone is on one side of the equation or the other: disrupt, or be disrupted. The reality is that long term viability and sustainability of the business does not require disrupting to avoid being disrupted, but it does require the mindset of a disruptive innovator, and a willingness to seize disruptive opportunities when they are present. It also requires sustaining innovations 90% of the time, and the sort of operational efficiency that is often at odds with experimentation and innovation.
In other words, business needs a left brain and a right brain. You can't remain viable in the long term if you aren't constantly aware of when disruption is possible; on the other hand, maximizing the potential of disruption requires sustaining innovation and the sorts of activities that established companies excel at, and do every day. The key is to allocating a percentage of business activity to each of these dual modes, evaluating threats that could disrupt your business or industry, and being willing to cannibalize your own products and lines of business before someone else does.
Modern business allows no complacency. If you want to explore these questions more fully, I encourage you to download our ebook "Disruptive Confusion Unraveled".