Exploring Innovation Concepts With A Deep Dive Into Disruptive Innovation

I have found the topic of innovation quite fascinating, have been wanting to learn more about it. That quest for more knowledge about innovation led me to pick up a number of books, research the work done by a number of leading authors, academics, practitioners. I have read a number of books, some of which i wouldn’t recommend you touch with a barge pole and along the way i have stumbled across some fascinating theories and some very well respected authors. The subject of innovation i find is like “Fad Diets”, anyone and everyone who has any experience in the subject thinks they ought to write a book about their experiences. It’s hard to separate the wheat from the chaff, but if you persist and are careful you will find those (authors) who can delight.

Types Of Innovation

Types Of Innovation – Innovation is complex, many management gurus, academics, practitioners have tried over the years to compartmentalize the different forms of innovation. The reality is, in many practical situations the application of Innovation isn’t completely clear, a deeper analysis might suggest an overlap between different forms of innovation. Either ways to make things easy to understand Innovation has been broadly speaking classified into the following areas –

  1. Sustaining Innovation –
    • Definition – Defined as Innovation that creates a significant improvement on an existing product that aims to sustain the position, cement the position of the incumbent in an existing market.
    • Example – An example of a sustaining innovation would be a company like BMW that introducing a completely new capability and service in its top line cars where the car is able to detect a crash and put in a call to the emergency services so that help can be immediately dispatched.
  2. Incremental Innovation –
    • Definition – Defined as gradual continuous improvement on existing products or services
    • Example – Microsoft adding the capability for users to access ChatGPT’s AI service offering through its existing Bing search platform.
  3. Disruptive Innovation
    • Definition – Defined as the technology or new business model that disrupts the existing market.
    • Example – An example might be NetFlix who started off as a service offering videos on rent over snail mail. Over time as NetFlix grew the built the capability to stream video content over the internet, in the bargain decimating all the brick and mortar video rental business that were out there.
  4. Breakthrough or Radical Innovation
    • Definition – Defined as technological breakthrough that transforms existing industries and creates new markets.
    • Example – An example might be Go Car which is a car rental company that challenges the existing status quo by offering it’s customers the options to rent cars by the hour, pick up and drop off rental from different places around the city without having to go into car depot. Go Car and similar car companies have not managed to decimate the existing car rental market but rather have managed to create a new market and serve consumers who desire that additional flexibility.

For purposes of this article we will focus on Disruptive and Breakthrough innovation.

Break through or Radical Innovation – As we have seen above, breakthrough innovation is an innovation outcome that is brought about from inside a company, that pushes an existing service or a product to the next level. Breakthrough Innovation has the potential to open up the company to new markets including changing the way customers interact with the market or the industry. This is easy to relate to with the Go Car example we covered off above. Go Car does not destroy existing competition, neither does Go Car manage to destroy existing markets and drive customers away from existing markets to it’s newly created market. Go Car in-fact manages to create a parallel market, supplementing the offering from existing service providers such that all of them co-exist (with a slightly smaller share of the market as an end result).

Another example of a breakthrough innovation would be the first Dyson hand held bagless vaccum cleaners. Dyson did not destroy the existing market or decimate the existing market leaders, instead it created a new market for premium offerings which supplemented the offerings from the existing vaccum manufacturers.

Disruptive Innovation – Disruptive Innovation on the other hand is where organizations innovate to create value i.e. services, products, capabilities, etc. that are lower cost, more affordable, consumable by a larger market while creating a completely new market. The organization creating the disruptive innovation is not able to sell that product to its existing customers who are purchasing higher value products at more expensive prices. In many ways the organization has to cannibalize its existing offerings by innovating to create value for a completely new set of customers.

An example of disruptive innovation at play can be seen within the car industry. GM and Ford had traditionally been the leaders within the car industry worldwide. Then came Toyota with its more affordable but quality offerings, competing with GM and Ford at the lower end of the market. Over time the Toyota offering got better, built a strong and loyal customer offering with the company realizing they were now able to compete on more premium offerings, services. The rest is now history, we all know that Toyota is one of the worlds largest car makers and probably one of the most profitable car manufacturers if not more consistently profitable when compared to GM, Ford. With disruptive innovation the organizations with the new service, product offering end up taking on existing customers by delivering capabilities, services, products that are more affordable and thus delivering value to a much larger audience. Over time through additional innovation, capability building, etc. the organization manages to build better and better products, services, solutions and moves up the value chain delivering higher quality and more expensive offerings to its existing (or new) customers thus stealing large market share from existing market leaders.

Incumbents struggle to get their act together because they are too busy building and delivering higher priced products to existing customers who pay a premium for existing products and services. Incumbent market leaders also don’t quite believe that these new players who are developing cheaper products, services will ever be in a position to challenge them and steal away customers who are used to paying for premium products and services. These incumbents fail to realize that this new kid on the block by creating new lower priced products, services gets into the market at the bottom but over time is slowly building the capabilities it required to go up the ladder and offer the more expensive products, services that will eventually steal market share away from the existing market leaders.

A great way to learn more about disruptive innovation is to take 10 minutes out from your very busy day and watch this Q&A with late Prof. Clayton Christensen, Harvard Business School.

HBR Q&A with Prof. Clayton Christensen : Disruptive v/s Breakthrough Innovation

Prof. Clayton Christensen wrote many good books, the one that is most relevant to today’s discussion is called, “The Innovators Dilemma”. See and hear a short summary of the “Innovators Dilemma” here –

The Innovators Dilemma

While the short summary is good, it’s not going to be able to cover off all the relevant examples and details you might get from reading the entire book. However, if you have an hour and are keen to hear from Prof. Clayton Christensen himself i would recommend listening to the following video.

Prof. Clayton Christensen talks about Disruptive Innovation

Grab a copy of the Innovators Dilemma here – Good Reads, Amazon.

If you are teaching a class or talking to an audience around the ideas covered within the Innovators Dilemma and would like to read through some relevant resources, please checkout this link – Resources that support the book.

We hope you enjoyed this article. Drop us a note at trevor at hack2 dot live, if you have any questions, comments, input or feedback.

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