Unless you’ve been under a rock these last few months, you most likely have heard the term Disruptive Innovation. So many businesses are working on new ideas on how their product or service can “disrupt” their industry by making significant investment in resources such as time and money. So what does it all mean? Will you lose a competitive edge if you don’t focus on doing the same?
As you set out to design your strategic plans, one of the areas you should be thinking about is the current way you are conducting business and how you may improve, but that doesn’t necessarily mean create an entirely new product at such a large cost without knowing exactly what that means to you and your industry.
First, to understand your role in disruptive innovation, you must first understand what exactly it is and what exactly it isn’t.
The theory of disruptive innovation has been around for centuries. Seen over time by companies that have introduced new technologies that change how products and services are delivered. Think about how Apple changed the way people purchase music. How Netflix changed the way people watch video. How streaming video replaced the physical movie store. How books are now being delivered digitally.
In Clayton Christensen’s The Innovator’s Dilemma: When New Technologies Cause Great First to Fail, Disruptive Innovation is defined as the ability for companies to create new business models and technologies for the future or anticipated needs of its customers , even if the customer’s current needs do not require either of those strategies. – Hence the Dilemma.
But where do leaders go wrong?
First, many are often confuse about the definition of Disruption versus Innovation.
All too often, you will hear people speak of “disruption” but after further exploration, learn quickly that they are using the term loosely and actually defining innovation. Think of it this way, all disruptors are innovators, but not all innovators are disruptors.
Although both are very similar, there are unique differences with the biggest being that disruption takes place when a product or service displaces an existing market. Changes the way we think and do things.
For example, in a time where social media has become the norm , there was always a fear of photos that would be left lingering in the vast universe we call “online” – enter, Snapchat.com. The smartphone app that offers photo flashing where you can send photos and have them “self-destruct” . They took an industry that feared ‘archived photos in never- never land and created a strategy where you can still send and share photos but they disappear.
I know, everyone is talking Apple, Netfilx and some of the other core disruptors, my goal is to introduce you to other disruptors whose business models you may be able to relate too.
Some other examples, The E-Cigarette, the concept offered by Rent to Runway, Online Education etc.
Next, leaders often give up too soon. The Dilemma comes from not being able to address a current customers current need. Disruptors needs to be patient and anticipate the future needs of an industry and be able to take the risks associated with playing the “timing game”.
The ability to introduce your disruptive technology or systems needs to be done strategically and when the market is ready to receive such innovation. Too soon, you show your hand and your competitors can leverage your ideas, too late and you will lose first mover advantage and the ability to capitalize on your investment.
Not to mention, the adoption period for customers to grab on to the idea as innovative and fresh. People do not like to change so there is much art that goes into introducing new products into an industry and one that requires patience, commitment and funding to sustain – areas where many business leaders give up too soon.
Lastly, they often forget about the risk. Disruption implies both opportunity and risk and although business leaders can see all the opportunity, many fail to see the risk and disruption and risk go hand and hand.
For example, Uber introduced itself as a technology company that facilitates connecting drivers with passengers. When it hit the market, the novelty of it and convenience of it, mad e it prime for a new market, but quickly risk started to surface. Drivers were getting into accidents, some involved in illegal acts, plus the recent rulings in some states that Uber is expected to treat its drivers as employees vs. contractors. A risk management strategy would mitigate some of this risk and set limits to how much risk your company can take before there is a negative financial impact.
Disruption is inevitable and necessary for growth. With new technologies being released every minute and new innovations on how we conduct business change every day, it is fair to say that disruption is necessary for growth and growth means change.
As you set out to develop your disruptive strategy, be sure to first understand what is involved with being disruptor, understand the market you serve and the impact it will create and the risks associated with launching your new idea.