What is disruptive innovation?

Matthew Scadding
Jul 10, 2017 · 5 min read

Before my course starts on Monday I spent some of the weekend reading pre-course material mainly about the theory of ‘disruptive innovation’. This is actually a term I had not heard before so I was immediately interested to learn more. My hopes for the course are that it links with what I am doing at my school in the role of an ICT Integrator. The parts of the course that really appeal to me are critical thinking, design thinking, the hands-on workshops and exploring MIT.

Disruptive Innovation is a term coined by Harvard Business School Professor Clayton M Christensen. It describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. The term has been widely misunderstood since its introduction in 1995.

The first few pre-course readings were very business orientated and talked much about markets, incumbents, competitors and Wall Street. As I read further some more familiar topics came to the surface, including the design process, design thinking, barriers to innovation and how to overcome them and rules for innovating.

In reading an article by Luke Williams I definitely connected with his three biggest barriers to innovation . The first is feeling overwhelmed, directionless and without a clear focus. He says traditional brainstorming methods just result in paralysing you with possibility and instead you should pursue a more creative effort with a laser sharp focus. Next, you should not think in terms of isolated products, a hybrid of product — service — information is better. Finally, getting stuck at the water cooler. Stop just talking about ideas and start sketching them as ambiguity will disappear when you describe your ideas in a written and visual form.

To overcome these stumbling blocks you can do a few things. The first is to focus your efforts and develop your ideas further. Break down your ideas into smaller parts and examine each in a new way. Williams says an opportunity has 3 parts: an opportunity to provide (who)?, with (what advantage)?, that (fills what gap)? An example he gave is driving, people do not just drive a car, they check email, take phone calls and more, so…

“There is an opportunity to provide drivers (who) with ways of being more productive (advantage) that are safe and optimised for driving (gap).”

Williams says forcing connections and pushing boundaries is also important. Connections can be found in unlikely places, such as the design for the iPod came from the clean look and design of bathroom basins.

Figure out what you can blend together. Pick your top 3 ideas that offer the greatest differentiation and have the largest benefits to customers. Refine and develop the ideas and think about how to blend the product with the service and information. An example of a blended product is the iPhone:

  • Product — iPhone and iOS
  • Service — iTunes, App store
  • Information — from the internet

Finally, think about what your disruptive ideas are. Share your ideas, be specific and concrete. Create a one page slide for each, include drawings, a description, visuals and seek feedback.

Is Uber disruptive innovation?

Uber was founded in 2009 in San Francisco and is now in over 600 cities worldwide. It is valued at over $50 billion and it is expanding rapidly. Uber allows any car owner to use their car as a taxi service to earn money.

Uber signalled a new way of doing something familiar to most people. But it isn’t truly a disruptive innovation, here is why:

  1. Uber did not originate in a low end or new market
  2. Uber is a ‘sustaining’ innovator because in the eyes of the customer they made an existing product better

Four key elements of the theory:

  1. Incumbents in a market improve along a trajectory of sustaining innovation
  2. They overshoot customer needs
  3. They possess the ability to respond to a disruptive threat
  4. Incumbents end up floundering as a result of the disruption

Robin Chase points out that Uber is disruptive as well as a sustaining innovation because you can use your own car as a taxi, something he calls ‘excess capacity’. You use your own downtime from your other means of earning money and use a resource you already own, your car. Uber offers a way to take advantage of existing assets where new value can be found in them. This is called ‘leveraging excess capacity’ and this is certainly disruptive. Other examples include Airbnb, WhatsApp and MOOCs.

Robin also uses a term ‘Peers Inc.’ to describe excess capacity. Take the iPhone as an example. An iPhone runs the Apple iOS software, the platform harnessed the capacity of the iPhone and the imagination of software developers around the world and in just 7 years over 2 million apps had been created for the iPhone. WhatsApp had 400 million users in the first 3 years, 800 million within 5. This would have been impossible had users needed to go out and buy a new device.

So how useful is the theory?

Andrew A King suggests stories about disruptive innovation can provide warnings of what may happen, but they are not a substitute for critical thinking. The decisions a manager makes for a company should be based on careful, fundamental analysis of the nature of competition and the sources of competitive advantage.

Anyway, that’s a start and lots more to follow over the next few days.

References

Christensen, C 2015, What Is Disruptive Innovation?, Harvard Business Review, accessed 10 July 2017, <https://hbr.org/2015/12/what-is-disruptive-innovation>.

Chase, R 2016, We Need to Expand the Definition of Disruptive Innovation, Harvard Business Review, accessed 10 July 2017, <https://hbr.org/2016/01/we-need-to-expand-the-definition-of-disruptive-innovation>.

King, A 2015, How Useful Is the Theory of Disruptive Innovation?, MIT Sloan Management Review, accessed 10 July 2017, <http://sloanreview.mit.edu/article/how-useful-is-the-theory-of-disruptive-innovation/>.

Williams, L 2011, The 3 Biggest Barriers To Innovation, And How To Smash Them, Fastcodesign, accessed 10 July 2017, <https://www.fastcodesign.com/1665442/the-3-biggest-barriers-to-innovation-and-how-to-smash-them>.

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