The reality of established modelsIncremental innovation is fundamental for growth and improvement. However, when companies put all their eggs in one basket, they risk encountering the innovator’s dilemma. It’s a term coined by Clayton Christensen, and explains: “How successful, outstanding companies can do everything “right” and yet still lose their market leadership – or even fail – as new, unexpected competitors rise and take over the market.” Thus, when companies focus solely on perfecting existing models, competitors can rapidly develop their own solution and take over a significant share of the market. What it comes down to is: You’ve done the grinding to establish what works, and they simply adopt your findings. There are two things behind such developments:
- You’re so fixated on polishing up, that new trends and technologies fly right past you.
- Cutting-edge innovation with the right sponsorship renders a running start to market disruption.
What is disruptive innovation?As the name already indicates, the goal of disruptive innovation is to disrupt an existing market and its value chain. It refers to innovation that typically transforms expensive and very refined services or products into versions that are cheaper and accessible to a larger population. When done right, it’ll eventually displace front-line firms, products, and alliances. When a market’s already established, disruptors enjoy the second mover advantage. After all, building blocks for a new approach are there for the takes. The theory of disruptive innovation was developed by Clayton Christensen and can also be described as a method in which new businesses replace incumbent ones. Some key principles to consider are:
- Not every innovation strategy includes disruptive innovation
- Disruptive innovation can be new-market or low-end
- View disruptive innovation as a process instead of a fixed product
Disruption examples: How they make good products betterDisruptive innovation provides an alternative solution to needs that are being solved by something else. Therefore, the initial integration of a product into the market will be easy. Let’s look at some examples:
- People used to landlines easily adopted cell phones.
- PC’s eased the transition to laptops, the only difference was it being portable.
- Motorbikes turned out to be a more flexible mode of transportation than cars.
Leveraging ecosystems of innovators to disrupt“Nowadays the tech is going so fast that we have no other option but to partner with others. Long gone is the time where we could come up with our proprietary solution and live on it for a few years. Nowadays, that’s no longer possible.” It’s a quote from the then Director of Incubation at NCS Group, our client and speaker at a recent webinar. She hit the nail on the head. Those that want to innovate, simply can’t stick to a plan that only involves their R&D department or dedicated innovation team. Not only is it key to identify consumer needs or opportunities and develop solutions accordingly, it must happen at an accelerated pace and at scale. Those that leverage ecosystems of innovators will find themselves able to transform their core business, enter new markets more easily, develop innovative and good products, and overall secure in a mainstream market with established companies as their fierce competition.
Partnerships with startupsCreating a new or improved product, service or process at lower cost is hard. Startups or fellow business partners can offer speed, insights and resources that are simply not available internally. Or at least not available in the amount and timeframe that you need them. While an R&D team alone might need months if not years to develop the technology needed to serve the market, a small startup might have it readily available, they’re simply waiting for their corporate sponsor or supporter to scale or even launch it. So, when companies identify potential collaborators and then forge partnerships with them, they open up a new world of opportunities to disrupt the market they operate in.
Reveal talent and ideas hidden in the organizationWhile looking externally is rewarding, ask Enterprise Singapore, Bayer or Hitachi for example, it’s not the only way to disrupt. Animating employees to develop new products and services is a great way to accelerate innovation within a company. Open Innovation challenges and internal idea boxes are a goldmine for finding valuable solutions that disrupt an existing market. The key is to centralize all the ideas and talent that are currently hidden in the organization, collectively assess and develop them and then implement them at an accelerated pace. Two market leaders, PepsiCo and Majorel respectively, have seen the value of internal innovation firsthand. While Majorel achieved majorly improved internal processes, PepsiCo developed a new product with record go-to-market time. Learn more about their innovation and idea management success stories here.
Disruptive innovation models: Find a solution that fits your needsDisruptive innovation calls for access to hidden market needs, consumer feedback or technologies that could make a solution available to a broader public. Often by making it more accessible and affordable. So, how do you accelerate and scale access to ideas and talent that possesses such information and solutions? Crowdsourcing through an idea and innovation management platform is a popular solution. The right platform engages your existing community and creates access to a greater ecosystem, fosters collaboration and enables a funnel-based approach of idea management. Agorize is a G2-recognized leader in idea management that offers such a solution. With many fortune 500 companies and industry leaders as our clients, we know what it takes to set up a process to create new digital technologies, make good products better and better intersect with the needs of the market. Examples include PepsiCo, AWS, Bayer, Majorel and Huawei. Each have used Agorize’s innovation management platform to leverage collective intelligence in their ecosystems. Key to their success was their use of our dedicated software. Thanks to a variety of features enterprise companies are able to identify, assess and develop solutions from startups, employees and customers.
ConclusionThe concept of disruptive innovation captures many people’s attention as it has created some of the biggest industry names we know today. However, not every innovation process is truly disruptive. New disruptive technologies are serious threats to established competitors in a market as they can create permanent shifts. Therefore, executives must continuously be aware of the developments in the market and maintain an understanding of transformation needs required to keep up. Incumbent companies can do so by opening up their innovation strategy to a broader community or ecosystem of internal talent and external startups to identify hidden ideas. And the time is now to accelerate that journey. After all, this rapidly changing market isn’t waiting for anyone, and those that take action last might find themselves missing out altogether. Book a call with our team of innovation experts to learn how Agorize can help you accelerate today.
As the name already advocates, the goal is to disrupt an existing market and its value chain. Do it right and you’ll eventually displace front-line firms, products, and alliances. The market’s already established, so you enjoy the second mover advantage. Building blocks for a new approach are there for the takes. By analyzing the current situation you can use the information to redesign conventional business models. Divergence in the technology used, price, channels etc. can be enough to obtain market segments that are currently underserved.