February 24, 2015

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Disruptive Innovation

A disruptive innovation can help create a new market and value network, or disrupt an existing market and value network by displacing an earlier technology. The term is used to describe innovations that improve a product or service in ways that the market does not expect; typically first by designing for a different set of consumers in a new market, and later, by lowering prices in the existing market.

The theory of disruptive innovation was first coined by Harvard professor Clayton M. Christensen in his research on the disk-drive industry, and later popularized by his book, “The Innovator’s Dilemma”, published in 1997. A classic example is the personal computer. Prior to its introduction, mainframes and minicomputers were the prevailing products in the computing industry. Apple, one of the pioneers in personal computing, began selling its early computers in the late 1970s and early 1980s—but as a toy for children. Gradually, the innovation improved. Within a few years, the smaller, more affordable personal computer became good enough to do the work that previously required minicomputers. This created a huge new market and ultimately eliminated the existing industry.

Most recently, in the Internet of Things, Belkins WeMo has been disrupting the space with a range of simple-to-use attachments that allow consumers to program basic behaviors (e.g., on/off) for their electrical devices. Belkin has been improving and expanding on a winning formula, which includes giving its customers access to a visual interface to create “If This, Then That” recipes for controlling their home devices. Now WeMo is offering the WeMo Maker kit, which can be used to convert many electrical devices powered by DC transformers into programmable appliances.

There are many more disruptive innovations that are changing the world as we see and experience it. Some of the interesting ones are:

  1. Autonomous Vehicles: The continued evolution of fully self-driving or “autonomous” vehicles. Their arrival is now just a matter of time, but is expected to transform the transportation industry. The technology and cost for autonomous vehicles are almost ready for the mass market with the real hold-up being the regulators, who barely know how to begin rethinking a hundred years of safety, insurance, and traffic laws.
  2. Health and Fitness – The Quantified Self: There are numerous new applications that collect, report, and respond to information from a user’s own body - a trend that is sometimes referred to as “the quantified self.” These include devices for health and improved fitness training. There are separate categories for seniors, people with disabilities, kids, and athletes - again using much of the same technology.
  3. Manufacturing – 3D Printing and Robotics: 3D printing pioneer MakerBot announced the availability of filaments (the basic plastic media used by the printers) that have integrated real-world materials including iron, bronze, maple and limestone. Printing objects with these new media can produce much more realistic looking output, moving the technology closer to printing “real” items rather than plastic simulacra.
  4. The Internet of Things: Everything is now made capable of collecting, sending and receiving information by embedding smaller and more powerful components into it. The disruptive impact will cross many industries, including manufacturing, distribution, retailing, consumer products, agriculture and transportation.
  5. Augmented Reality: Advances in display and audio technologies enable users to experience real and imagined environments with ever-greater richness, whether in the form of virtual reality goggles and earphones that provide immersive gaming experiences or superimposed displays that augment the view out a car window. The continued decline in price, size and power requirements for basic computing components continue to spark revolutionary change in the world of sensory input.

Today, disruptive innovation is no longer an exception, it’s the rule. If we are not proactively driving disruption, we’ll eventually need to react to it. Having a disruptive innovation capability is mandatory, both for growing a business and protecting existing markets. In modern enterprise, disruptive innovation requires employees to embrace a radically different approach to product development or marketing. Often a product of out-of-the-box thinking, disruptive changes can initially seem out of step with contemporary preferences but in the longer run prove successful in their ability to create newer market opportunities where none existed before.

The potential for reinvention is all around us and it’s an exciting time to be thinking about how to structure (or restructure) our business, community or even life in ways that create new value. Like Richard Branson says, “One has to passionately believe it is possible to change the industry, to turn it on its head, to make sure that it will never be the same again.”

Let’s enjoy the possibilities!!!