Foreign outsourcing is an excellent choice for linear innovation, but a fatal choice for disruptive innovation.
The fact is that today, in a society that is radically changing (Disruptive Innovation°),
Demand is transforming and
CURRENT BUSINESS
IS NO LONGER ABLE TO MEET IT.
So, in this scenario, or you are able to radically change the conception of your product, or you are out of the market.
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The reasons for this are not easy to understand (since our reasoning is still based on the culture of “linear progress”, pre-disruption).
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In the first place it is necessary to note that:
1) the products that are successful in sales today are products with radically new qualities compared to those of products developed to date.
2)
THE RADICAL CHANGE OF PRODUCT TYPES
CANNOT BE DEFINED WITHOUT A RADICAL CHANGE
OF PRODUCTION MODES (AND DISTRIBUTION)
And – very important – it is not just about improving production processes: it is about radically revolutionizing the conception of production. Industry 4.0: the Smart manufacturing
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It is a matter of changing the mindset upstream of everything.Why the big companies cannot innovate within them [1]: the problem of the mindset
In this situation the culture and analytical tools used up to that point become obsolete.
In particular it is necessary to point out that
in times of rapid and radical changes
ANALYSIS MODELS CANNOT WORK.
This happens mainly due to the fact that In times of radical innovation there are no models
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The basic question is that the correct approach for the current market is therefore no longer in numbers (Big Data is one of the fatal misunderstandings of the incumbents business) Disruption is a quantum leap that can not be predicted with statistics
The general characteristics of the New Demand°, like evolving Needs°, make an approach necessary completely new, based mainly on intuitive skills There is no “Culture of innovation”, but an Aptitude for innovation
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In summary, the analytic tools, and in general the “analysts” methods, are of no use because
● in the internal analysis of the Company, they allow at most to identify possible improvements to specific aspects of the Company, but do not allow at all – as it would be required today – to radically change the paradigm of its strategies (Paradigm shift°).
● external analysis of the Market, do not allow us to perceive the nuances of the new needs of Customers.
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This basic problem of applying an obsolete culture to a completely new scenario leads to the creation of further misunderstandings that undermine the current strategies of the Incumbents.
And so, today, the objective linked to the “Data vision” of the Market is pursued: the cost-effectiveness of the product. An objective that leads to the inability to insert into the product the new qualities required by the emerging market (for example new Values) The misunderstanding on: “low-cost” is disruptive innovation
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That is, in an age of disruption it happens that
paradoxically
putting the focus on profits
the profits end up ending
The fact is that remaining focused on profits, you end up resorting to the “old school” stratagems: you save on costs, and in the end you are surpassed by those who are able, even without having good skills in the sector, to further reduce costs (as is the case of the “Chineses”).
If we want to analyze the cause of the current problems of the market, we must note the difference between the original market (the one in force until a few decades ago) and the current financial market: once profits were a spontaneous consequence of the intuition of a mode of satisfaction of people’s needs (it was thought first and foremost which product qualities could be really useful for the Customers, and therefore the generation of profit was organized).
While today, overturning the law of Supply and Demand, we focus primarily on the generation of profits.
In this mode, one is deprived of the creative abilities typical of the fundamental figure of the Market of the past: the Entrepreneur (today the entrepreneurs, at the level of the Incumbents, have been supplanted by the Managers). <see The problems of the Society and the Market (introduction)>
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From the point of view of those who are studying the current disruption, the emerging market does not require cheaper products, but radically different products, able to satisfy the needs of people much better than we are doing now..
The economic aspect, which is always very important, can be tackled later, but in a different way: for example you can take advantage of the new Consumer technologies (which cost “a few dollars”). Disruptive innovation is not based on technologies
Or
applying greater smartness in the product design phase
(by also involving the Customers)
PRODUCTS CAN BE OBTAINED
THAT ARE SIMULTANEOUSLY
OF BETTER QUALITY AND CHEAPER.
