Disruptive innovation is all over the media. It is called “disruption” or “innovative disruption”. The concept seems recent by its popularity. In reality, it is 25 years old and was introduced by Clayton M. Christensen. Christensen’s concept is essential today, for all types of organizations.
The two characteristics of disruptive innovation
Its first characteristic is a disruption of the current rules. As its name suggests, disruptive innovation is not intended to be superficial or without effects. Quite the opposite actually, it results in a significant change and can be game-changing in its most advanced form.
The second characteristic of disruption is mockery : at first, it is mocked before being adopted. The disruptive innovation is mocked for 2 reasons:
- the disruption it causes upsets incumbents companies by impacting the current value proposition. As a result, disruptive innovations are often kept locked-up so that it does not affect the day-to-day running of the business. Mockery is a reaction to a threat to the organization itself.
- This new value proposition of the disruptive innovation usually creates a fear of novelty. This novelty is seen as “unnecessary” by decision makers mindset within the organization. Mockery is a neophobic reaction.
Two strategies for conceptualizing disruption
Customers (or users) who are “over-served”
What is “over-service”? The word is strange but the concept is simple. The customer (or user) would be satisfied with a product that is inferior in quality if it would cost less. This strategy means targeting customers in a lower segment. The iconic example is “low-cost” service in air transport. If you are willing to trade less comfort against a cheaper plane ticket, then you are “over-served” by airline companies that do not provide a “low-cost” service. This innovation changes the rules of the game.
The low-cost disruption changes the rules of the game.
Customers (or users) who do not consume
This strategy is the most interesting and should concern most decision-makers: why some people are not buying my product or using my service? This disruptive innovation is the most effective (from a disruption point of view) and therefore the most devastating. It completely destroys the pre-existing market by completely shifting supply and demand. The iconic example is digital photography. For those who remember photographic films and their expensive development, printing was a technical necessity and the incumbents back then thought that the desire (and the need) to print photos would be eternal. Digital photography allowed us to take an unlimited number of photos without having to print them. This new value proposition attracted those who did not use film cameras and then convinced those who did to drop this product. This innovation does not change the rules of the game, it is game-changing.
The most effective disruption doesn’t change current rules, it is game-changing.
Why is disruptive innovation so important today ?
Disruptive innovation is an essential concept today because it fuels the debate on the value proposition, more particularly the relationship between this value created (and proposed) and the customer or user’s reaction. With his theory of disruptive innovation, Christensen warns organizations that move away from customer or user expectations by focusing too much on their competitors.
Christensen warns organizations that move away from customer or user expectations by focusing too much on their competitors.
By adopting a “competitor-oriented” strategy, organizations focus its resources (time, investments in particular) on improving existing products and services, disconnected from the customers or users expectations.
By neglecting current customers or users, new companies canemerge by meeting these unmet expectations. The customer or user is captured by another organization.
How to create disruption ?
The good news about disruptive innovation is that it is accessible. Many people think that disruptive innovation is always the result of a technological advantage. Technology can be the source of disruptive innovation, but disruptive innovation is not technological per se, at least to the extent that the intellectual property of the technology does not give an overriding advantage in disruptive innovation. Disruptive innovation does not lie in the technological advantage, but in the value proposition of each organization and the business model that surrounds that proposition.
Disruptive innovation does not lie in the technological advantage, but in the value proposition of each organization
To create disruption, focus on the current use and whether the current value proposition overlaps with the current or emerging use. Simply questioning the existing value proposition is sufficient to address and then initiate a disruptive innovation.
To implement a disruptive innovation strategy, it is easier to create a new structure (regardless of its initial size) rather than trying to transform the current organization. Like every organization, there is a path dependency (past choices create lock-ins in organization’s culture). Creating an autonomous structure from scratch is the only way to challenge the current organization value proposition and business model.
In conclusion, disruptive innovation mindset is a perpetual questioning of the organization’s value proposition (and business model built around this proposition).
Disruptive innovation mindset is a perpetual questioning of the organization’s value proposition (and business model built around this proposition).
Key Concepts
- Disruptive innovation was theorized by Clayton M. Christensen
- Disruptive innovation is initially despised because of its novelty or the threat it could create to the organization’s current cash-flow.
- Two disruptive strategies: “low-cost” and “game-changing”
- Disruptive innovation is a questioning of the organization’s value proposition.
- Disruption is not a techno-centric concept (it is a business model concept)
References :
- Burger-Helmchen, T., Hussler, C., Cohendet P. (2016), “Les grands auteurs en management de l’innovation et de la créativité”, Editions CMS, p. 283–296.
- Christensen, C.M., Raynor, M.E. (2003), The Innovator’s Solution : Creating and Sustaining Successful Growth, Harvard Business School Press, Boston, Massachusetts.
- Bowler, J.L., Christensen, C.M. (1995), “Disruptive Technologies : Catching the Wave”, Harvard Business Review, vol. 73, n°1, p. 43–53.
- Christensen, C.M. (1997), The Innovator’s Dilemma : When New Technologies Cause Great Firms to Fail, Harvard Business School Press, Boston, Massachusetts.
