Succeeding at disruptive innovation (1/2)

When people think about disruptive innovation, they typically believe that being successful at it requires a degree of luck. No luck = no disruptive innovation. At the same time, in other business areas, luck doesn’t seem to be playing such an important role.

For example, in the case of launching products on a market, I’m always surprised by the degree of preparedness. It’s as if nothing is left to luck, as if everything has been prepared, as if every scenario has been carefully planned out, as if any unforeseeable event has been somehow foreseen. What’s astonishing is that this degree of preparedness is not found in disruptive innovation. This is probably because disruptive innovation is considered to be such a crapshoot or a black box as Scott Anthony would say.

But, as I’ve shown in previous articles on this blog, a lot of what mystifies people on disruptive innovation can be demystified: whether it’s defining the term disruptive innovation, understanding how disruptive innovation works, providing some clues on anticipating disruptive innovation. The same is also true with succeeding at disruptive innovation. Understanding brings clarity to the mind.

I’ve listed three questions that can help managers succeed at disruptive innovation. I’ll assume that managers are evaluating an innovation and want to figure out whether this innovation is disruptive in nature or not. I’m well aware that succeeding at disruptive innovation takes much more than being successful at evaluating it. And, I’ll certainly describe in forthcoming posts what other challenges a manager must face in order to be fully successful at disruptive innovation. But, for now, let’s look at how to assess whether an innovation is truly disruptive.

I/ Key questions to succeeding at disruptive innovation

The first question one should ask is: does this innovation allow a large segment of people do something that only a few people could do in the past? For example, before digital photography was introduced, it was very difficult for anyone to share pictures. One had to take the picture which required to own an expensive camera and to carry it around appropriately and take pictures when necessary. It also required to go to the film photography lab, develop pictures and ask for duplicates of the particular picture that one would want to share with friends, and then, finally share the picture with the friend in question. When digital photography arose, a much larger segment of people could start taking pictures and sharing them with friends. Today most people have a smart phone which comes with digital photography capability. Taking pictures is easy and sharing them doesn’t require to go to a lab or any third party. In this respect, a digital camera incorporated into a smart phone satisfied this first question of widening a given segment of consumers.

II/ Succeeding at disruptive innovation means looking at consumers willing to pay a lower price

Second question one should ask is: are there any customers in the mainstream market who would be willing to pay a lower price for a lower performing product? As has been mentioned before, many companies tend to overshoot what their customers demand. For example, in the airline industry, air carriers have added food, baggage transfer, videos, games, drinks, and all sorts of other services which come at a cost. Many customers are happy to pay a price premium to enjoy these additional services, but some customers really just want to get from point A to point B and would rather not pay a price premium for additional services. Therefore, this has created an opportunity for low-cost air carriers to disrupt traditional air carriers. There are countless of other examples where industry incumbents have overshot significantly what a segment of their customers want. Doing so, they have created a vacuum at the low end of their industry, allowing for a new entrants to come in and get some piece of the action.

Next week, I’ll talk about the third question to ask in order to assess the disruptive potential of an innovation. In the meantime, what questions do you believe must be addressed in order to assess the disruptive nature of an innovation?

Further readings on succeeding at disruptive innovation:

• For a clear discussion on how to succeed at disruptive innovation please refer to Clayton Christensen’s Innovator’s Solution. The book outlines nine challenges to address in order to succeed at disruptive innovation; one of these challenges includes how to beat competition.
• For a discussion on the importance of creating something inherently different on the market in order to succeed, please refer René Mauborgne’s Blue ocean strategy, introduction and chapter 1
• For a discussion on what questions need to be addressed when assessing whether or not to enter a new business, please refer to Michael Porter’s Competitive Strategy, chapter 16
• Finally, for a discussion on how we tend to see innovation as being something difficult to explain, please refer to Scott Anthony’s Little Black Book of Innovation; also refer to this post