Harvard business school (HBS) has been teaching disruptive strategy for decades. Their professor Clayton Christenson is a disruptive innovation pundit. Are those evangelizations not good enough in creating and succeeding with disruptive innovation strategies? Of course, we credit Clayton for his disruptive innovation theory. Despite it, more than 90 percent of startups fail with disruptive ideas. Upon burning billions, Uber and others have been struggling to turn their ideas into disruptive innovations. But, without going to Harvard or any other reputed business schools, Steve Jobs surfaced as a disruptive innovation guru. Similarly, many Japanese firms succeeded in disrupting the innovation edge of American firms, often led by HBS alumnae. Such reality demands us to have a fresh look at disruptive innovation strategy, for pursuing ideas to destroy mature products and firms in producing them and to make competition irrelevant.
Prof. Clayton did a great job in describing disruptive innovations. On the other extreme, Steve jobs and many Japanese companies have demonstrated magical performance in creating innovation successes by disruption. But neither description of disruptive innovations nor the magical performance is good enough. Innovators would like to know how to do disruptive innovations. They would like to know what the elements of disruptive innovation strategy are so that they can form, communicate and empower teams to think strategically in pursuing disruptive innovations. Disruptive strategy is about a game plan of pursuing ideas for creating a new market by destroying the demand for mature products and firms making them. It also demands turning competition irrelevant in the newly created market. As the disruptive innovation journey endures for decades, the strategy should consistently lay the foundation for systematic persuasion.
Describing disruptive innovation:
Causing disruption in existing markets and business is the outcome of disruptive innovation. Innovation has many connotations like the product, process, grassroots, radical, and frugal. Besides, product innovation could be incremental, sustaining, or disruptive. It seems that Prof. Clayton has described disruptive innovation as an innovation that creates a new market and value network. It enters from the bottom of an existing market but eventually displaces established market-leading products and firms. But this definition does not help us much about how it occurs. Such clarity is highly needed to develop a disruptive innovation strategy
y. Hence, we should consider an alternative definition to give us greater clarity.
Disruptive innovation refers to disruption suffered by existing businesses due to switching failure to creative destruction wave created by the reinvention of current products due to the change of technology core. As disruptive innovation is quite different from other forms of innovation, disruptive innovation strategy should be more than enabling us to make innovation a reality.
Irrespective of the greatness, all products mature after going through incremental advancement. It happens due to the maturity of the underlying technology core. A new wave of growth begins due to reinvention through the change of mature technology cores with emerging ones. However, this new wave appears in an inferior form. Hence, often, incumbent firms producing mature products ignore it. However, in some instances, innovators succeed in progressing the technology core, leading to making inferior new wave as a better alternative. Hence, it succeeds as a creative destruction force to mature products at the inflection point. But suppose new entrants drive this creative destruction wave and incumbents fail to switch. In that case, existing firms producing mature products suffer from disruption, making this new wave a disruptive innovation.
Lesson from disruptive innovation examples:
The most outstanding examples of disruptive innovation are Apple’s Macintosh, iPod, and iPhone. Of course, they were led by Steve Jobs. From where did he learn? Did he go to Harvard Business School (HBS), or did Apple recruit HBS graduates or faculty members to lead it? NO. Perhaps, he did not have any strategy either–it distilled over a period.
Steve had empathy, attention to detail, and a passion for perfection. His feeling about customers’ pain points was so deep that customers used to find them beyond their imagination once they were shown. But how did it create role models of disruptive innovation? His desire for improvement used to stress the limitations of the existing technology core. Hence, he used to look around to find alternatives. For example, he found GUI for Macintosh, click wheel for iPod, and multitouch for iPhone.
Yes, reinventions of PC, portable music players, and smartphones with those technology cores emerged in primitive form. Hence, the Apple team ran into an endless journey of perfection for scaling up, leading to new waves as creative destruction forces. As incumbents could not keep pace with Apple’s fierce speed of perfection, they failed to switch and suffered from disruptive effects. Apple also exploited economies of scope and network externality effects to complement the scale. Steve also benefited from synchronization with external factors and building a global idea supply chain to make his reinvention wave scale up.
Similar patterns of reinvention creating disruptive effects are observed in the uprising of creative destruction waves of the LED light bulb, LCD television, digital cameras, transistor radios, solid-state drive and TVs, word processors, and eBooks as disruptive innovations.
Defining disruptive innovation strategy:
Upon drawing lessons from disruptive innovation examples, we need to formulate a strategy so that we can help a team systematically and consistently pursue it to create sustained effects, leading to disruptive innovations.
Disruptive innovation begins with empathy and passion for perfection for helping fellow human beings get their jobs done better. Empathy should be so deep that even target users get surprised upon seeing the innovation. Deep empathy will make us feel the urgency of changing the technology, leading to reinvention. But for making the decision appropriate, we need inputs from monitoring and forecasting technology core and competing products.
As reinvention waves around emerging technology cores surface in an inferior form, we need to have systematic activities in creating economies of scale, scope, and network externality effects. However, to sustain the reinvention wave in the market, innovators should have the passion and capacity to release successive better versions at an adequate speed so that competitors cannot catch up.
However, as the reinvention wave demands positive externality effects, timing should be suitable for synchronization. Despite the internal strength, invariably, all inventions require the integration of ideas supplied by others. For example, iPhone integrates ideas from more than 200 suppliers. Hence, there is a need for a global idea supply chain for fueling the reinvention wave, making it creative destruction. The last one is the necessity of intellectual property management for ensuring a legally defendable flow of ideas.
Once we pursue all these elements systematically, there is a good chance that empathy triggered reinvention wave succeeds in destroying the demand for mature products. Besides, it does not allow the incumbents to switch. As a result, we have disruptive innovations in helping customers get their jobs done better. Of course, it also makes competition irrelevant, as competitors cannot keep pace.
The disruptive innovation strategy has ten dimensions, as follows.
- Empathy—a driver of creating the urgency of changing technology core and refinement
- Monitoring and forecasting—for appropriate selection of product, technology, and timing
- Reinvention ideas—for beginning the journey of a new wave of growth
- Scale—making reinventions increasingly better and cheaper through refinement
- Scope—for taking advantage of reuse of core assets
- Externality—creating of network externality effects and taking advantage of +ve externalities
- Releasing successive better versions—for sustaining innovation in the competition space
- Timing and synchronization—very crucial for the rise of reinvention wave
- Idea supply chain—integration of ideas from global sources is essential
- Intellectual properties for fending off competition—for legally defending and fending off
Hopefully, this ten-dimensional disruptive innovation strategy will form a strong discipline in the thinking and pursing disruptive innovation journey. Perhaps, it will offer far greater clarity than the current state of understanding about how to succeed in disruptive innovation, instead of just explaining examples.