Since the inception of the start-up culture, the word “disruption” has been romanticized by founders and Venture – Capitalists alike. Every new company that exists in the market space, is looking for technological breakthroughs, and has been selling these breakthroughs as disruptive innovation. Meanwhile, Clayton Christensen smirks in his office at Harvard.
Little do these companies know that disruptive innovation is not about bringing the newest technology to the market and investing in making the consumers wary of it. In fact, it is about how easily you can solve people’s problems. Contrary to popular belief, people buy solutions, not technology.While the incumbents are busy getting the largest share of the market, disruptive innovations move across the boundaries of existing markets and create new, uncontested market spaces.
Companies must keep these three points in mind while looking at disruptive innovation:
1)Understand industries that are sensitive to disruption
The first step to understand the need to innovate disruptively is to understand how sensitive the industry is to disruption. In a market that is highly dynamic, disruption occurs every few years. Whereas in markets that are stable, disruption occurs every few decades.
However, the only defense mechanism for disruption, is disruption. Disruption is never about offering technological breakthroughs, it’s about adopting new business models. Companies must understand that they are still giving the same (or lesser) offerings to the consumer, but they are disrupting the competitor. The key is to compete in a totally different way.
2)Induce innovation at every level of the business, but keep disruptors independent of mainstream business
Disruptive innovation often comes from radical ideas. Radical ideas can come from any employee of the company, or from any network in the whole value chain. Steps must be taken to spot disruptive innovation. Next, these ideas must definitively be delegated to work areas that are independent of managerial hierarchy. Typically, managers are scared to foster disruptive innovation as they do not affect the bottom line for quite some time.
3)Start small, then scale up
Disruption does not happen overnight. Companies do not get into an industry just to disrupt. The best way to focus on disruptive innovation, is to focus a small part of your budget on a test basis. Then once the product starts performing well in the market, start scaling it up.
At some point of time, the innovations must get out of the incubator and become a major part of the company. As much as it is important to build a product that ensues disruption,it is equally important to build a product that sustains that disruption.
In conclusion, the essence of disruptive innovation lies at focusing on why you should do rather than what more you can do. Disruptive innovation has immense potential in solving fundamental problems of people, it empowers the common man by making products more accessible to him. Disruptive innovation attacks a problem asymmetrically. Most incumbent companies play the innovation game like chess, very thoughtfully, move by move. Disruptive innovation must be played like poker. You make mistakes, lose hands, bet strategically, until you win that one big hand. The innovation hand!
Sahil Arora.
