How To Choose The Right Path to Disruptive Innovation
The Innovators Dilemma
The media has long talked about the digital revolution and how it is changing the face of the business landscape. Innovation it seems is common place with breakthroughs in exponential technologies like Artificial Intelligence (AI), nanotechnology and 3D printing, popularising the innovation agenda.
But here in lies the innovators dilemma: “To innovate or not to innovate?” — that is the question.
To put it another way, if businesses do not innovate then they run the risk of disruptive competition cannibalizing their established business models and ultimately their bottom line. On the other hand, if businesses do decide to innovate, then which path to innovation lends itself best to the business?
Paths to Innovation
The get to the answer we should first look at the various paths to innovation that are on the table for businesses today. In his book “The Ways To New” Jean-Marie Dru tables 15 paths to disruptive innovation — I’ve provided some current examples below, which I hope will help provided further context of each path.
1) Open Disruption — this path opens businesses to sharing and exchanging ideas with the crowd. Crowdsourcing has been successfully used by Starbucks, Proctor & Gamble, Lego and many, many others
2) Structural Disruption — involves making structural changes inside an organisation. For example, by establishing a self-standing innovation lab which is separate from business as usual (BAU) activities with it’s sole purpose focused on creating new, innovative products and services. Labs are common place amongst the most innovative companies in the world e.g. Google, Nike, AT&T, Tesco, Xerox and MIT.
3) Asset Disruption — this path leverages a companies existing core assets to create disruptive innovations. Amazon is a great example of this. Amazons core asset is their infrastructure i.e. their ability to source, stock and ship millions of products around the world. By opening this infrastructure up to merchants, they extended their core asset to become a retailing platform for 3rd party businesses. This same asset has now been extended into hosting, data and cloud computing services.
4) Reverse Disruption — this path is organised around the principle of “doing more with less”. Simply put, the challenge here is to product 80% of a products features for 20% of the cost. Nissan and Tesla are classic examples of this with the release of new models at a reduced cost, but which include the features of previously more expensive models as standard.
5) Sustainable Disruption — this path involves combining business and social responsibility to address a new commercial endeavours. The one-for-one shoe company Toms, donates one shoe for every shoe purchased. This policy creates a groundswell of reciprocity in their market, which drives sales and business revenue.
6) Data Driven Disruption — this path uses data (or big data) to create new disruptive innovations. Forward Lane, is a New York based startup which uses big data and artificial intelligence (AI) to provide scalable investment advice to mass affluent investors. Big data has also been used by companies like 23andMe to disrupt the pharmaceutical industry.
7) Usage Based Disruption — this path works with user data e.g. the use and role of mobile phones to create new products. EVP plus in Somalia (similar to mPesa in Kenya) observed the lack of a banking infrastructure and the high penetration rate and usage of mobile phones. Today, Somalia is turning into a virtually cashless society simply by enabling payments to be made via the mobile phone.
8) Price-Led Disruption — MTN Zone, where the price of calls were discounted or increased based on the volume of users in specific locations is a fantastic example of a price-led disruption in South Africa.
9) Added-Service Disruption — Discovery in my view, is one of the most innovative health insurance companies in South Africa. One of their more recent promotions included the provision of a free Apple Smart watch and linked it to their Vitality Rewards program. Providing the watch for free, as a value added service in an innovative approach to lifestyle and wellness in the category.
10) Partnership-Led Disruption — effectively the pursuit of unexpected alliances between businesses. A recent example is the partnership between Tesla and AirBNB. By bringing charging stations to select homes across the US, Tesla is enabling owners the opportunity to reach more destinations on the open road.
11) Brand-Led Disruption — many innovative brands today are moving completely away from emotive and functional brand territories like Vodacoms “Power to You”, Cell C’s “Believe” and Telkoms “Tomorrow is in your hands”, and towards a purpose driven brand space. AirBNB’s “a world with no strangers” and Gatorades “win from within” are messages that truly upweight these brands into an entirely new purpose driven space in their respective categories.
12) Insight-Driven Disruption — Raymond Ackerman, the founder of Pick ‘n Pay, was renowned for walking up and own the isle of his stores and speaking to customers to garner insights into their shopping behaviour. By simply using these insights to create a better shopping experience for his customers, he built a hugely successful business and one of South Africa’s most iconic brands. In the US, Netflix competes with HBO by using insights into consumed content on their platform, to determine future production decisions. The Vice President of Netflix, Joris Evers was recently quoted as saying: “We want to become HBO faster than HBO can become Neflix”.
13) Revival-Based Disruption — involves redefining a brands value and meaning. Volvo life paint, a product designed to protect cyclists, glows in the headlights of cars at night. Volvo’s Life Paint was sold out in the UK in its first week and redefined Volvo’s brand pillar of safety into an entirely new category.
14) Anticipation-Lead Disruption — Elon Musks space exploration company, Space X, is anticipating the need for global space travel and multi-planetary colonisation. Space X is the first company in the world, to launch a payload into orbit and have the rocket land again. Their re-usable rockets are the first step towards the enablement of their anticipatory and disruptive innovation lead vision.
15) Business Model Disruption — Uber is arguably the worlds best example of business model disruption today. By simply disrupting the automotive industry through the mobile channel, the company has redefined an entire industry and is today valued at an astonishing $68 billion by Forbes.
Choosing A Path
The common thread that ties all these paths to innovation is simple. They all chart a course through an increasingly complex world. But perhaps the greatest value in these paths to innovation is that they enable new problem-solving techniques and address the need to future proof businesses by establishing a common innovation lead culture.
Conclusion
So what is the right path to innovation for your business? Well, perhaps the first step is for marketers to change the way they think about their markets, their customers, and their businesses. By doing this first, you’ll uncover questions you may never have thought to ask in the first place.
P.S. Thanks for reading this far! If you found value in this, I’d really appreciate it if you recommend this post (by clicking the ❤ button) so other people can see it!.
Matthew Brown
Founder, Digital Kungfu
“We’re a community of entrepreneurs working together to succeed in business”
Twitter: @digitalkungfuza
