Bits and pieces on disruptive innovation

In revision discussions with some of my students over the last few days we’ve gone over a number of points to do with disruptive innovation and in this post I’m potentially sharing them with a wider audience.

I tend to use smartphones, and tablets such as the iPad, as a contemporary example of disruptive innovation.  However one interpretation of disruptive innovation is that it occurs when new products replace old ones and so disrupt the market.  You could argue, that because the tablet computer is neither a phone nor a computer, and in many cases is an extra product for people who already have a phone and a personal computer, it isn’t obviously a replacement for another product.

The key is in that word ‘replacement’.  The iPad isn’t a substitute, in the sense that the term is often used in discussing business strategy, for other products.  But it could replace the personal computer as the primary place that you handle your emails, deal with facebook, and use YouTube.

Your phone might still be the favoured tool for phone calls and text messages and playing Tetris –  and for checking when the next bus is going to arrive and for emails when you really need to work with them on the move.  You might still want a computer if you want to put your accounts in a spreadsheet or to write a dissertation – tasks for which some of us, at least, really need a full-sized keyboard.  But the availability of the tablet is disruptive because it challenges assumptions about the way that technology is being used.

The example of the iPad also illustrates a couple of the difficulties associated with disruptive innovations.  Because they aren’t well understood, you can’t make any accurate predictions of how popular they are likely to be on the strength of conventional market research.  You can’t just ask people whether they’d use a product that isn’t familiar to them (text messaging is an even more dramatic example of this – if you’d surveyed people in the early 1990s, when mobile phones shifted from high-priced corporate devices to consumer goods, whether they could see themselves using texts they would almost certainly have said ‘no’).  And because they aren’t well understood, products which take advantage of disruptive innovation are often ignored by competitors, who don’t think of the new products as a threat.  When Apple entered the phone market, the established phone manufacturers seemed to assume that they were only after a niche market of consumers who wanted a specialised product.  But Apple seamlessly colonised more of the market until they became a major player.

Disruptive innovation often demands a new business model.  One of the clever things that Apple has done, is to adopt a new business model which creates an ‘ecosystem’ between Apple and the developers and providers of apps.  Very often, established businesses have business models which stop working when certain disruptive innovations come in.  For example a concern for Microsoft and Dell is that their business models are tied up with a world where PC users do all sorts of different tasks – email/word processing/web browsing and so on – ontheir computers.  To develop, these businesses potentially need to ‘un-learn’ some of the assumptions that they’ve been working with for years.

But there’s a tension here.  The message of all the work on knowledge management is that businesses are defined by the expertise and assumptions that are built up over the years.  So one challenge for a business working with disruptive innovation is to recognise when to cultivate knowledge, and when to challenge existing knowledge that may be so specific to a particular environment that it becomes counter-productive (and you get what strategists refer to as ‘rigidities’).

One final thing about the iPad – disruptive innovation often depends on a business recognising when the underlying technology is good enough to make a new product.  This is something that, historically, Apple has been effective at – even going back to the first Macintosh computers which took advantage of memory becoming cheap enough to make a mass-market computer based around a graphics screem and a mouse a realistic prospect.

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One Response to “Bits and pieces on disruptive innovation”

  1. Odun Says:

    Thanks Martin. I enjoyed reading your perspective on disruptive innovation.
    A few comments about the penultimate paragraph – re: ‘But there’s a tension here. The message of all the work on knowledge management is that businesses are defined by the expertise and assumptions that are built up over the years. So one challenge for a business working with disruptive innovation is to recognise when to cultivate knowledge, and when to challenge existing knowledge that may be so specific to a particular environment that it becomes counter-productive (and you get what strategists refer to as ‘rigidities’).’

    I think you have a valid point in the need to ‘recognise when to cultivate knowledge, and when to challenge existing knowledge that may be so specific to a particular environment that it becomes counter-productive’.
    Whilst I agree it’s a fine balance, I think knowledge management and disruptive innovation can co-exist. I call it ‘knowdivation’. In order for a business to continue to be a going-concern in tomorrow’s competitive business landscape, organisations have to ‘knowdivate’, adopt an adaptive and agile business and information systems strategy, which I would interpret as continuous innovation (‘snooze and you lose’). Existing ‘harvested’ knowledge should continually be challenged without fear of the outcome (disruptive or additive). Businesses should encourage disruptive innovation as it has come to stay, but should be tempered with sound knowledge management and time-to-market strategy.

    After all, part of Apple’s strategy has been ‘immovation’ which is ‘imitation+innovation’. There is no point reinventing the wheel, you can get better results by actually improve on the process, functionality or usage of the existing wheel. Immovation can be applied by organisations both internally and externally to capture and challenge existing knowledge and ‘knowdivate’. Soon carbon nanotubes are going to replace silicon chips or in the interim a hybrid silicocarbontubes (silicon to carbon nanotubes). All good for consumers…
    Having said that, the flip side is that once the business is tagged as always coming up with disruptive technologies, consumers may be reluctant in buying their products (not like i-products though), as they become dated quickly (like my current i-Phone 3G!!!) unless you cant do without them.

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