Is it the terrible ideas that are the most disruptive ones?

There was a great comment by Alan Jones of BlueChilli this week that summed up one of the real challenges of disruptive innovation. What he said is this;

…it’s the terrible ideas which are truly disruptive, which have massive entrenched competition, making products nobody wants to buy or even has a use for yet, which don’t have a clear revenue model or a go to market strategy.

What does this say about disruptive innovation? That it’s hard to predict! Disruptive innovations are low performers in the first instance, not high performers. This is where they start, before they rapidly develop to the point where they can compete in mainstream markets. And it is by no means certain that a potentially disruptive innovation will actually become disruptive. All of the normal competitive threats and business challenges lie between the fledgling innovation and the industry defining impact that they might one day come to represent.

The moral to the story in this case is that adopting disruption as a deliberate business strategy is risky business.  Find a market need, define a coherent business plan, then set about taking it to market.  Disruption will follow as a result of good business planning and execution, not planning to be disruptive!

Disruptive innovation everywhere?

Reading some of this week’s discussions on disruptive innovation, I was struck by how frequently and casually the phrase ‘disruptive innovation’ is being used. In many instances it is used in the sense that Christensen originally coined – to describe an innovation that creates widespread change, displacing an incumbent technology while forcing extensive structural change upon an industry.   That’s one end of the spectrum. At the other end, the term seems to be used to describe an innovation that allows competition to take place along non-traditional lines. The interview with Wired Vice President and Publisher Howard Mittman discussing disruptive innovation at Wired Bizcon 2014 (here) is a good case in point, as he suggests that disruption is everywhere (at least everywhere enough to organise a conference to discuss it). This might be true, but it’s unlikely.

In this respect, the use of the term simply describes another form of business competition, regardless of whether it’s technologically based or not. For example, the recent Virgin Disruptors panel debate covered a range of issues affecting innovation, but the discussion was premised on the idea that non-traditional companies leveraging digital technology to compete against established firms represented disruption. Now, there’s no doubt that this type of competition can be difficult for incumbent firms to counter, but not impossible. And most incumbent firms can see – and are acting on – the potential of these digital technologies to make their existing business models obsolete. In fact, some of the most established businesses are at the forefront of applying these technologies to cement their incumbency. Companies like Google, Amazon and Apple.

But disruptive innovation doesn’t really work like that. In fact, most academic studies on the topic indicate that this type of innovation is almost impossible to predict ex-ante, or before the fact. By their very nature, disruptive innovations have highly uncertain outcomes and follow a development path that is unpredictable and are often unexpected. This is why they are disruptive and so difficult to stop –because it’s extremely difficult to see them coming. Alternatively, if they can see them coming, incumbent firms find it difficult to credit them as having the competitive power that they eventually develop. It’s kind of like seeing the gifted sportsperson who changes code. You can see the talent, but can’t credit the rapid development that takes place almost overnight until the novice ‘suddenly’ becomes the master.

Even when an innovation is trumpeted as being disruptive, it’s not necessarily clear what is being disrupted, or who will benefit from it. Take the example of Tesla and its electric cars. There is no doubt that Tesla is causing the incumbent auto manufacturers deep concern. But it takes a long time to build capacity and brand in an industry with high capital costs. And in that time, the big auto makers have huge resources to throw at the competitive threat posed by all electric cars. However, those that should be more worried are in the petrol industry supply chain. Cars are still going to need car components, but eventually they won’t need that network of gas stations that you’ll find in every city and town, and everywhere in between. So is Tesla disruptive to incumbent auto makers? A competitive threat, to be sure. Disruptive? Unlikely. Is it a disruptive threat to Shell, Exxon and BP? A much more likely prospect.

Still, the allure of creating a disruptive innovation – either a technology or a business model – is difficult to ignore. The possibility of leveraging technology to bypass established supply chains, with their cozy established relationships, or of creating entirely new markets served by a small, dynamic outfit is an exciting possibility. And whether that’s called disruptive or not won’t change the dynamics of the situation. And it certainly won’t change the importance of passion and drive in bringing new ideas to market and driving them to them succeed.

The diffusion of disruptive technologies

The term disruption is used pretty liberally these days.  I can understand why – what’s not to like about the idea that anyone can come up with an idea and with minimal resources, knock the ‘big boys’ off, remake industries or create new ones all together!  It’s hard not to get caught up in the excitement of an idea like that!

However, the term disruption as coined by Clayton Christensen means something quite different to the way it is mostly used in the media, and as a way to promote the potential of new ideas.  My interest in disruptive innovation originates in work I have done with two companies working in the cleantech space, as well as doctoral level research I have done on the topic.  The idea – as well as the application of the idea – interest me intensely, and this site has been set up to explore some ideas on the topic.  I have a particular interest in the social changes that accompany the diffusion of technological innovation, and that will be a focus of this site.  However, in exploring the issue, I also intend to discuss innovation more generally – what it is, how it happens and its symbiotic relationship with the social fabric that simultaneously sustains it and pushes it forward while altering and redirecting it at the same time.

In addition to posting thoughts, I’ll be publishing white papers on a range of issues relating to the topic – with the first being a (relatively dry…) summation of my doctoral research findings.  From there things will get more interesting.  I hope interesting enough to prompt your own thoughts, and to keep you coming back for more…!  I look forward to your contributions and to connecting with you to discuss your own insights into innovation.