1,744 total views
Many would agree that our lives are driven by innovations in business. We are familiar with technological innovations that are driven by a need for better performance of products that we buy. This approach, driven by experience, calculations and skills, can be fairly controllable and learnable.
On the other hand, there are disruptive innovations, firstly described by Joseph Schumpeter in the 1940s. These innovations are not always obvious and often driven by changes in society and technology. Their aim is not to reflect wishes of current mainstream consumers, but to find a new niche market, which they address by introducing new features, though initial performance is usually worse. The impact of the disruptive innovation has a substantial effect on the outcome of the sustaining innovation, as if the market changes due to the disruption, the sustaining innovation tends to be a failure. This was experienced by great companies like Nokia and Blackberry that underestimated the impact of the change. Therefore, consumer focus strategy, taught at schools as an effective way of driving performance, can be in some cases fatal for many businesses.
But what makes the innovation disruptive? That is a tough question for many reasons. Firstly, many disruptive innovations in history were successful due to their technological development, which, as not expected by market leaders, overcame the initial disadvantages (e.g. telephone, PC, GoPro etc.). These disruptive products were firstly undesirable to the main market, as they were not satisfying the needs of consumers. Secondly, there have been a variety of disruptive innovations that arose from technological or social changes that were not imaginable at that time. For example, Kodak never imagined that the rising trend of digitalization would lead people to stop using traditional photographs and albums. Similarly, Microsoft never imagined that the tablet would one day become a global success, owned in millions of homes worldwide. Their decision to halt production of a tablet prototype, left a gap in the market which the iPad later seized. Microsoft had assumed the tablet’s lack of a keyboard would result in a failure on the market (since the PC was vastly used for administrative purposes), but the release of the iPad quickly demonstrated how wrong they were to assume this.
There are even more challenges in regard to disruptive innovations. Some innovations represented change in society, for example the way people opened themselves to socialization. This was a driving force of Facebook, or later Uber, Airbnb and other platforms, which would be hardly surviving a decade ago, when such loose barriers within society were hard to imagine. Imagine offering a sleepover for strangers at yours over the internet just 15 years ago.
Aren’t the great ideas that we admire today just one of thousands of trials that happened to be successful? There is an enormous number of entrepreneurs and organizations coming up with new ideas every minute. However, only a few can make a break through. We could argue that it is also about the skills and knowledge that are needed to bring the innovation to the market, but on the other hand, we can see many failures under the control of successful businessmen and organizations. Approximately half of Dragons Den projects fail, as well as projects developed by enormous organizations like Google.
Disruptive innovations are very hard to address. Even though there are successful examples of entrepreneurs standing behind disruptions like Amazon, Alibaba or Netflix, their “continuity” in new disruptions is questionable. These companies were mostly undertaking sustaining innovations in recent years. However, this seems not to be the case for Apple under the Steve Jobs era. Steve Jobs has foreseen many changes and disrupted the world of consumer technology. However, did Apple learn how to disrupt? Even Apple seems to have moved to safe waters, solely reacting to needs of current customers (larger screen for iPhone, iPay, iMusic etc). However, it is (as other companies like Expedia, Microsoft or Samsung) able to react to potential disruption through its market power that allows more time to react to potential disruptors.
We do not need to learn how to disrupt, to come up with something “shocking”, we just need to learn how to build on existing disruptions and change the process of sustaining innovations. We need to deeply understand the business. I consider disruptive innovations as something that bring hope and motivation to the economy and keep it alive. Without them, the idea that you can always create something different and better would fade out under the influence of big corporations growing to control the environment.
Instead of copying disruptors or trying to fight them as “competitors”,we should learn from them to fully understand what is behind their success. Understand if our customers changed, and if so, how. Disruptive innovations should not be taken as a goal, but as an “eyeopener” that should lead us to question whether we should fix what isn’t broken. Disruptive innovations will arise anyway. They are products of consumers themselves, products of our tension to consume more and to rethink our lives. They are prophets of change. They affect the way businesses start, grow and fail. They support redistribution of power and sources in the business, and the world would look very different without them. If McDonalds never failed and kept growing, what would we be eating in 30 years time?