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Exploring disruptive innovation

This article appears in the issue March 2006 (100 Companies) [Volume 15, Issue 3]

Clayton Christensen, Harvard professor, gained a reputation for his disruptive innovation research--products or systems that create entirely new markets. His research explains why established companies--even those managed by smart people--have such trouble countering or embracing disruptive innovations on the horizon.

Examples of disruptive innovations are Kodak traditional cameras vs. digital photography, IBM missing the low-end PC market and letting Dell become a dominant global player, eBay revolutionizing the online marketplace and Siemens eHealth marketplaces revolutionizing how health solutions are delivered. Also watch out to see if Microsoft and SAP --two global giants partnering to create Mendocino, seamless integration between Outlook and SAP's backend transactional systems--achieve disruptive innovation or are viewed as sustaining technology (successive incremental improvements to performance that are integrated into existing products). Time will tell, but many are watching this new platform as it emerges from its pilot labs into the mass markets in 2007 and beyond.

Disruptive Innovation also usually happens on the edge, so early stage companies are always worth following. Look at: bubblelabs.com, cquay.com, quickplaymedia.com, snipenetwork.com, view22.com--all excellent examples of companies fundamentally altering old paradigms.

With innovation top of mind for CEOs globally, understanding how to identify disruptive innovations before they become mainstream and take advantage of the "white space" is a skill to cultivate. Disruptive innovation patterns of change are more difficult to see because they are complex and often emerge rapidly. Just think of the wireless market and the penetration that has been achieved globally as a dominant form of communication vs. other disruptive solutions like the television and its impact on the radio industry. From patterns of 100 years to 50 years to less than five years for global pervasiveness, the innovation waves are now more compressed in revolutionizing entire industries. Just look at Google (google.com)!

One of the dominant reasons executives cannot see disruptive innovations easily is their mental models or "mind sets" have created entrenched patterns of thinking. Turning upside down all current assumptions and processes to respond to barely emergent market changes typically is not a core competency of most global organizations.

For CEOs and their executive teams to become more competent in innovation, they need to understand what innovation means; develop cultures that exploit innovation and continually embrace, reshape and facilitate new discovery; and engage in collaborative conversations. Developing collaborative leadership cultures that develop innovations that are customer-centric and build a brand proposition around a specific need will be more successful in tackling the innovation growth challenge.


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