Disruptive Innovation to create a market where you are the standard to follow

Disruptive innovation and technological breakthroughs

People often confuse disruptive innovation with technological breakthroughs, and this even though both concepts are completely different. Here is a clarification of both concepts that you should keep in mind:

Technological breakthroughs :

They are new technologies that provide better performances than existing technologies do. They supersede and replace existing technologies. But they do not create a new market. New technologies are in fact usually invented to improve a product or a service in an existing, mature market. That is why they involve incremental innovations and not disruptive innovations.

Disruptive innovation :

Disruptive innovation is an innovation that leads to the creation of a new market. These new markets differ radically from existing markets. Their essence lies in changing the customer’s concepts. They usually provide much better advantages to customers at a much lower cost. They are very often based on existing, tried and tested technologies, despite the appearances.

My advice:

Do not wait for a disruptive innovation to come along to look for new growth drivers. The process of creating new technologies is long and costly. And yet you can boost your business’ growth simply through a disruptive innovation, without needing to invest heavily in R&D. Take my advice: carry out a low-cost disruptive innovation in a niche – this will give you the means to create a new market where you are the standard to follow.

Some examples to illustrate my point :

1.Disruptive innovation without technological breakthroughs:

• The software on which social networks such as Facebook and Twitter are based was not the result of a technological innovation. It was instead the fruit of a conceptual innovation: facilitating the creation and sharing of contents by the users themselves. This disruptive innovation changed our way of living. It started the transition from the Web 1.0 to the Web 2.0 (the interactive web).
  See also: Disruptive innovation, the takeoff of Facebook explained

• The iPhone revolutionized the concept of mobile telecommunication. However the technology that it uses was already around before it was launched. Apple created the iPhone without creating any technological breakthroughs.
• Read about other examples:
  Disruptive innovation: redirect existing technologies
  Sustainable competitive advantages in the agricultural sector are within reach
  The secret to Amazon's success in disruptive innovation

2. From technological innovation to disruptive innovation:

• CCD technology :
  
  CCD technology is applied to components that are used for capturing light signals and turning them into electrical signals. It makes them 10 times more sensitive to light, as compared with standard silver photographic film. Such technology was first used in very powerful telescopes to help them capture the light signals of very distant stars.
  
  The invention of CCD technology was a technological breakthrough since it meant that an entirely new technology was available for capturing light. But it was not in itself a disruptive innovation: it was an incremental innovation in the field of telescopes.
  
  The disruptive innovation happened when CCD technology was used for other purposes: digital photography and ultimately sharing pictures through the Internet, computers and mobile phones. These new activities have revolutionized our way of living. Without CCD technology there would be no pictures on the internet…
• Flash memory :
  
  Flash memory technology is used in memory cards. It has been applied to USB keys (flash drives), digital cameras, cell phones, etc… These new memory cards have partly replaced RAM (Random Access Memory) and regular computer hard drives. It was a disruptive technology because it allowed a significantly better compromise between access speed and price. Flash memory technology was initially used as an incremental innovation: its purpose was to replace the hard drives and memory technology used in computers.
  
  The disruptive innovation happened when flash memory technology was applied to the USB keys that are found in audio players (replacing the original Walkman) and especially in Smartphones (iPhone). The disruptive technology made improved data storage possible. The disruptive innovation made inventing the iPhone, a telephone which revolutionized the way we use telephones, possible…

A disruptive innovation is at your doorstep !

You have all the capacities that you need to carry out a disruptive innovation, regardless of whether you are a small business or a big corporation. Carrying out a disruptive innovation means:

- Creating a new market
- Becoming the standard on that market and keeping that status throughout its development.

There are many tactics and strategies that help you succeed in this task. However the most important thing is to think outside the box. It is always possible to see things with another angle, especially when everyone is thinking in the same way. For instance:

Imagine that you are in the year 1900. Carriages are drawn by horses. And then somebody comes along and invents the automobile. People then compare automobiles with horse-drawn carriages and draw up a list of pros and cons:
- Automobiles make noise
- They constantly break down
- You constantly need to fill up the automobile’s gas tank
- They require that all roads be paved with a layer of tar
- They need gas stations everywhere
- They go a little faster than horse-drawn carriages do, but that’s about it…

Thinking differently and creating a disruptive innovation involves knowing how to detect opportunities that are real but hidden because they are only just emerging.

Below you will find a couple of extracts from the conference I held at the Global Speakers’ Summit in Amsterdam on 16/04/2011:

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A new paradigm for your disruptive innovation

Disruptive innovation makes revolutionizing a market possible.

You provide customers with significant advantages at a low cost. But it seems like an impossible challenge. And many of my clients ask me: “how do you combine significant advantages and low costs?” Incorporate the new “Pull” paradigm in your business strategy and you will find the answer!

The new « Pull » paradigm

The end of the « Push » world is approaching. It is based on offers made to passive customers (whether these take them up or not). The world we are entering is a world of “Pull”, based on co-creation through frequent interaction with customers.

• Passion :
  The « Pull » world is characterized by the rise of a society of enthusiasts. Consumers seek fulfillment by becoming passionate about what they do. This is applicable to sports, creative activities and professional activities.


• Interactivity :
  Customers have become proactive. The days when they waited around in silence, patiently and passively, for a product to come their way (the days of“Push”) are over. They now go looking for the products and the information they need, be it through their community or through interactive media. Hence the growth of search marketing and social media on the internet.

Incorporate this new paradigm in your disruptive innovation strategy

3 critical ideas that are as many keys to disruptive innovations can be taken from « The Power of Pull », a book published in 2010. You can make advantages for your customers bigger, while keeping costs low, by giving them the means to:

• Access information :
  By stimulating the enthusiast community surrounding your products through community management, you make it easier for customers to access the information they need. Your customers then give each other advice on how to best use your products. This means that you can constantly monitor their needs and adapt your products to their respective markets.


• Discover new ideas :
  Give your customers the opportunity to find the solutions to their problems within the community. They will then find the solutions to problems they have not even experienced yet. They will thank you for this by bringing in new customers. In this way your business will experience astonishing growth rates.


• Achieve incredible exploits :
  Assist your customers in achieving goals that they merely dream of. You can make this happen through the resourcefulness of the community. Your offer becomes therefore much more valuable than those of your competitors, and you end up dominating your market.

This new paradigm, that John Hagel has coined the “Pull” world, is in perfect agreement with the disruptive innovation methodology that I have been advocating for a few years now…

Read also:
Creating and preserving your competitive advantage in the face of much stronger competition

Source : « The Power of Pull » by John Hagel