Can an innovative industry disrupt one that isn’t?
Industries don’t innovate at the same rate — and some industries innovate better than others. For example, the technology industry is a lean, efficient, innovation machine. It constantly evolves its product offer and finds new ways to create customer value. In contrast, the property development industry, focused on built infrastructure and traditional business models, is slow to innovate and adapt to customer needs.
Could the technology industry disrupt the property industry? What could the property industry learn from the technology industry? What if an industry, in the long run, could benefit from being low innovation, because it makes it easier to predict what could happen to the industry in the future? My dissertation completed as part of a Masters in Innovation, Creativity and Leadership, tried to answer some of these questions.
I wanted to know how I could transfer ideas from the technology industry to the property industry to disrupt it and make it better. More specifically, I wanted to know how to judge whether an idea had innovation potential in a low innovation industry. My research developed a process that would do just this and then tested it on a case study.
The research was built around an idea that while radical innovations may be hard to deliver, what appears to be a radical innovation to one industry, may just be an incremental innovation to another. If this is true, then mature innovations could be plucked from an innovative industry, tweaked a little, and then dropped into another industry with disruptive consequences.
According to Erwin Danneels (2004), disruptive innovations change the way value is perceived by those buying a product and the way those customers approach purchasing decisions. Because disruptive innovations affect the way customers value products — including existing ones — they can have serious consequences for products that fail to keep up with the change. However, disruptive innovations can also unlock significant new value and solve ingrained problems.
Geoffrey Moore (2002) says that disruptive innovations have a habit of initially failing — with the innovator often claiming, “the world wasn’t ready”. To succeed, disruptive innovations depend on changes to supporting structures in the wider industry and market. In contrast, sustaining or incremental innovations offer more certainty but less value and can suffer from the “law of diminishing returns”.
A potential solution is proposed by Govindarjen and Trimble (2010) who have found that the best way to deliver disruptive innovation is to make it look and act like incremental change.
My research proposed reducing the risk of a disruptive innovation failing by taking an existing product concept from an innovative industry and redeploying it in a less-innovative industry. By basing the new product on an existing product from somewhere else, it could still be disruptive to the new industry, but the amount of change required to the product is limited. This could be particularly true if there are similarities between the supporting structures or markets in both industries. For example, if the two industries share the same customers, then it may be easier to convince them to use a product similar to one they are already using in another industry.
This approach could enable the producers of incumbent products in innovative industries to unlock value in other, less-innovative industries. It could also help to disrupt the less-innovative industry, unlocking additional value and helping to solve ingrained problems.
The research explored these ideas by developing a process that could help to identify relevant product concepts to transfer between an innovative industry and a less-innovative opportunity industry. It then tested and evaluated the process on a case study scenario which looked at the technology and property development industry.
In the next article, I’ll talk through the process I propose, before exploring the results of testing in on the case study.
