- Introduction to the Disruptive Innovation: the concept of Innovation 
- What disruption essentially is
- Decalogue of Rules
of Disruptive innovation
- Disruptive innovation: religion, scam or necessity for those who want to stay in the market?
- The lack of a real Innovation
- The difficulty of understanding (to explain) the concept of radical change (disruptive innovation)
In the first place it is necessary to clarify the meaning of the term innovation [ see ‘Manifesto of Innovation (1): the basic principles of sustainable innovation ]
The competitive advantage of the Product
is no longer in improving the current types of products,
BUT IN RADICALLY NEW PRODUCTS, “NEW THING°”
[which then enter a market in which them literally find no competition]..
In other words, it is about putting most of the focus not on the product itself, but on the qualities but on the qualities hanging on the product (described in these points).
Above all it is to allow the User to develop New Practices.
A radically new approach to product design is therefore necessary: it must not be the improvement – of performance – of an already existing type of product, but must represent a “New thing°”.
For example, in the case of the electric car it is not a question of improving the “car”, but of conceiving a radically different vehicle.
Radical innovation also means:
Functional innovation for the (which requires radically different solutions than the current ones) means not entering an existing Market sector, but being the First Mover in a new sector.
For example, the new electric car must not be an evolution of the automobile, but must represent a more general innovation of Mobility: it is necessary to focus not on the new vehicle itself, but on the mobility services that can be developed with it.
UTILITY VALUE OF THE PRODUCT (THE PRODUCT IS A SERVICE)
Today Customers, with a very limited spending,
need “useful preformances” and no more than “emotional values”.
The “” are different from the “hi-tech” performances promised today by advertising.
The requires , which represent a disruptive leap compared to the generation of current products (which are produced by the scarce whose appeal lies on an emotional component).
That is, the new generations of products must be real assistants who develop a service for the Customer (the product is a service°).
This is not Product as a service as it is understood today, ie with products combined with a service provided by the manufacturer, but a service – developed by the “smart” part of the product – which consists of
● a service component incorporated in the product (essentially an App integrated into the product).
● a Peer to Peer component developed thanks to the integration of the product into social networks related to the product.
BOTTOM-UP VALUES – INTERCONNECTED (SOCIAL NETWORKED) PROACTIVE CONSUMERS
In the new dimension of disruptive innovation,
THE CUSTOMER AS A PASSIVE ELEMENT
(in which its intervention is limited to choosing existing products)
BECOMES A PRO-ACTIVE ELEMENT
(Connected Proactive Consumer).
The Crowd is the basic element of the Copernican Revolution in progress today: from a Market driven by the Company Managers (who do not have a perception of the real needs of people) we move to a “crowdsourcing” market (Customer Driven) in which: the Customer:
● participate in the development of the Product (Market strategies will be based on ).
● personally manage the operational life of the product, among other things by modifying it to adapt it to new needs.
● organize themselves at Peer-to-Peer level to bring out the maximum Value-Utility of the product.
A fundamental point: the fact that the products (the Customer) are Social networked allows them to improve their lives by developing new practices (new ways of living, such as Smart Consumerism) [see Rule “collaborative products/ sharing”]
FRIENDLY CONSUMER EXPERIENCE
The new Demand requires a friendly consumer experience
that has not yet been developed.
The new generation of products will actually be user-friendly in the sense that they can be easily used – with maximum profit – even by absolutely “techno-illiterate” people.
This new level of friendliness of the interaction of the new generation of Smart products is favored by:
Today, “friendly” products are actually products that can only be used by people who are able to learn “technical” concepts.
To develop real disruptive innovation (which brings real advantages over current product generation) the User interface must be redesigned according to the principles of Human oriented innovation (see Rule “Holistic Innovation”).
The interface available to the Users must be self-explanatory -” grandma “proof (this applies to any product: App, Hardware, Service, etc …).
In this way the product not only becomes accessible to most, but also allows techno-illiterate users to draw high value from it. For points that cannot be simplified, it is necessary to have interactive guides and online help (which should be crowd-sourced, managed by User communities).
A really friendly product must also allow the User to obtain high-value results. It must be
CONCEIVED AS AN ASSISTANT
That is, as an Agent working for the User solving problems.
A reference is Google Assistant (although it is a precursor product of the new generation, still developed in a “naive” way).
What is missing in a product like Google Assistent is what is “below” it. That is an Eco-system that allows to develop New Values required by the New Demand. It is an Ecosystem both for the Hardware and for the Software.
One of the problems with Google Assistent is that it relies heavily on AI, which leads to at least a couple of problems:
– The AI we are talking about today – used as a sales argument – in reality is not able to produce such useful results for the Customer (remember: the disruptivity of the innovation does not depend on technologies, but on the ability to develop new useful values for the Customer). So the concept of AI must be reviewed at the base <see My articles on Futuristic Vision (and Artificial Intelligence)>
– in the case of Google, of course, the “Intelligence” is used not to bring benefits to the user, but to favor the Company’s customers.
DISTRIBUTED SYSTEM (and OPEN SYSTEM)
One of the problems with Google Assistant is that it should be integrated into an Open System. That is a system that can integrate standard devices (the Eco-system must take into account, for example, the Tablet that the user already has at home – has Google forgotten having created Android?). [see Rule: “integration in an Eco-system”]
Google does not seem to take into account that the failure of vocal systems – as the one now is Google Home – derives from the fact in the office you can not to hear the colleges reasoning out loud: imagine family life if someone speaks continuously with the device from Google, or with the TV remote control.
Obviously, like many Incumbents, Google enjoys a monopoly condition, and therefore for the moment it has no real need to develop real innovation.
RAPIDITY/UBIQUITY OF ACCESS TO THE SYSTEM.
The interaction that makes the product really useful to the User is based on a quick accessibility of its features
An example: today we often do not resort to the App for the grocery list because to add a single item it is necessary to make several steps.
The Smart Watch can be an excellent Device that guarantees the ubiquity of access to the system.
To bring real advantages to the User, a new generation product must rely on integration with dedicated social networks.
The integration of Social Networks allows the product to develop the new Crowd Trends: basically to create new Practices to improve the quality of life.
It is a Trend like creating a Support Community for the purchasing phase to the management phase; product sharing, etc …
CONSUMER TECHNOLOGIES, NOT HI-TECHS
The sophistication of technologies does not matter,
it counts the ability to satisfy a real need of people.
One of the advantages offered by the Market is that today consumer technologies have a significant advantage over Hi-Techs. They in fact:
● cost a small part of the latter, and have equivalent “actually useful performances*” for the User.
● they are easier to insert into the product, and to program (there is no need to use highly specialized personnel).
The competitive value of a new generation product is therefore not due to the performance of the technologies themselves, but
● to the radical redefinition of the type of product and the creation of new features capable of satisfying important User needs that are still unsatisfied today (remember that the redefinition of the product entails a redefinition of the Market sector). For example, the new generation of electric vehicles will be completely different from the current cars – and fit into a more general sector of mobility.
● new ways of using the Product (which involves the development of new lifestyles).
The technologies serve to improve the effective utility of the Smart component of the product: Smart means intelligence whose purpose is the human being; it is not an intelligence of the product itself, but an “intelligence” developed in the use of the product by the User.
So Smartness comes from the possibility that the Customer has to solve, thanks to the product, its real problems. And the simpler the technologies are, the easier it is for them to allow the user a “smart” use.
“Hi-Tech” today is a weapon of incumbents (for the vast majority of products) used to leverage the emotional aspect. But Hi-tech of today do not allow us to develop truly disruptive products, because – in addition to the problem of the cost of hardware – they require very experienced designers, production operators and programmers.
PROXIMITY BUSINESS – from Global to Local (G-Local)
Proximity production allows for
lower costs, greater value for customer,
less pollution and relaunching of local economies.
One of the characteristics of the next Market is its transformation from Global to Local (or rather to G-Local).
This happens not only for the commercial aspect, but also for the production (Proximity Production, in which the production becomes independent from the geographical context).
This new dimension offers lower costs, less pollution, relaunching of local economies (and, by extension, relaunching national economies), greater product customization due to the characteristics of the area needs and the specific needs of the Customer [see Rule “Customizable/Evolving products “].
This transformation (like every aspect of functional innovation to the current era of disruption) is driven by more pressing needs:
● Customers absolutely need cheaper products; and there is a need for recovery of a more ecological dimension (for example reduction in transport).
● to restore local economies (unemployment, etc.)
● it becomes much easier to develop an on demand production (cost cutting of unsold products)
This change is favored by emerging Smart Manufacturing methods (an by the evolution of the “fake trend” Industry 4.0):
● with the ability to create easily and quickly, in an extremely economical way. light “production lines”, quickly adaptable to different productions.
● the possibility of operating in modality of “remote production*” (and of Franchising production© <<see Transplant factories, in “Manufactory 4.0 e Franchising-Transplant Factories”>.), and in a Value Web° (a dynamic system of suppliers that replaces the Value Chain).
SCALARITY OF THE SOLUTION (gradual upgradability)
One of the characteristics of the new generation products that allow a reduction in purchase costs is the modularity that allows a high scalability of the solution: it is possible to purchase the product in a minimum configuration and then, over the years, improve its capacity.
An important factor in the cost of the product is DURABILITY
(robustness, upgradeability and expandability).
Today in evaluating the costs of a product we don’t take into account the very short life span of current products. The problem for the Market is that currently the Consumer, with extremely limited spending due to the crisis, is beginning to require products that last for a long time (in the Smart Manufacturing dimension it is possible to produce highly competitive products that last tens of times compared to the current ones).
It is therefore necessary to abandon the current strategies of planned obsolescence, and begin to develop products with the following characteristics:
● robustness and intrinsic durability of materials and construction.
● characteristics of “evolving products°“: – upgradeability: by changing some parts, as in the PC, the product can be updated – expandability: it is possible to add some components that add new features to the product.
To understand the real cost of a product
t is necessary to evaluate the costs of product management
(consumption, repairs, etc.)
One of the factors of the real (economic) sustainability of the new generation of products is their management cost which is greatly reduced thanks to the fact that the User is allowed to develop the maintenance and repair operations himself (with the support of Communities Web).
More specifically the new generation of products must have the following qualities:
This quality is obtained not only with improved technologies, but above all thanks to a radical definition of the conception of the use of the Product [see Rule “Radical innovation and not performance improvement”].
That is, today the Product must be able to be used according to the dictates of the new Trends such as Social Impact and Smart Consumerism. We talk about features like
► “recovery” of energy (the “braking” system of new electric cars can be used in many other products, such as in lifts).
And in the
► direct energy production by the Consumer, which becomes Producer-Consumer, as in the cases of Electricity, in which some users can also produce energy that can be included in the grid. An example of product that itself produces the energy it consumes is an electric car with solar panels.
The new dimension of technology also enables the User with regard to product maintenance/repair (now carried out by “technicians”).
In other words, with the new generation of Products the need to resort to professionals for such interventions is lacking. This is possible thanks to:
► modularity – plug ‘n play –: there is an abandon of integrated products (such as the iMac) and a return to modular Plug n’ Play products (PC)
► self-explicability of the modules and interactive guides connected to each part (each element can have a QR code).
COLLABORATIVE PRODUCTS (SYSTEM) / SHARING
In the near future
the Value of a Product will depend on
ITS COLLABORATIVE AND SHARABLE QUALITIES.
The fact that the products are IoT connected to Communities (on Social Networks), among other things reduces product management costs.
The products of the new generation in fact allow the Customer to develop the emerging new Smart Consumerism, Circular economy practices (such as sharing, exchange of used products, etc.).
INTEGRATION IN AN ECO-SYSTEM
The “disruptive” qualities of a product – the new forms of value and the decrease in purchase and product management costs – can only be obtained if the product can be integrated into an eco-system of hardware and software products, and services.
That is a decisive added value derives from the integration in an Eco-system that allows the product (good or service) to develop further utility. It deals with:
– of the Eco-system that is being created spontaneously in the Market (with emerging standards);
– of an Eco-system created ad hoc (possibly with alliances with other producers).
The customization of the product INCREASES ITS USEFUL VALUE
for a Target or a specific User, And the updatability increases this value over time.
The Adaptability must be precisely conceived at two levels:
– Adaptability with respect to the local context (the Market will assume the dimension of Local Business – see Rule “proximity market”)
– Adaptability with respect to the specific Customer (this is not the typical customization of the Market current, but the development of the specific product tailored to the Customer with its participation in the Design process).
BUSINESS MODEL CHANGE: BUSINESS AS MISSION
In the emerging Market, change is also radical in the Business Model. A shift paradigm in which we recover the meaning of the Business Model itself lost in recent decades (and other features of the pre-industrial Society).
Today the business model is confused with the Revenue model: in reality the Business Model is aimed at the development of value for the Customer, while the Revenue model indicates how to profit from the Business: Business is the generation of a value, that is the satisfaction of a real need for the Customer.
In the last few decades, the original business idea has been lost, and the market focuses on the Revenue model. In this way a poor Value Market has developed which today pays the price for this wrong approach.
The disruption in progress in the market leads to the need to recover the original conception of the Business primarily focused on the generation of value (substantially value-useful for the customer). Context in which profit is a “side effect”.
Business as Mission°: note that in the new dimension the business recovers the idea of Mission as a “missionary” approach, that is the approach of those whose aim is to help others (and of course to profit from their own opera).
Two significant examples of this approach are Yahoo and Facebook, born solely to meet the needs of fellow university students: the profit came later, applying a Revenue model to the “Business model” (note that Yahoo failed when it switched to a Revenue-focused Model).
Today more features of the pre-industrial society are recovered:
– the “gift” component inherent in the product of the Craftsman (Max Weber).
– the Volunteerism that was the basis of the society prior to the Industrial Revolution (the “Public Works” were carried out, in corvee, by the inhabitants of the territory themselves, and the taxes were voluntary donations made to the Church).
Today this features are recovered with the phenomenon of Crowdsourcing and Open Source.
The products of the new generation are
a business mix for profit and
Some key points of the shift paradigm in place:
There are many changes in the new dimension.
VALUES WEBS – change in partnership relations
There is a transformation of the supply chain into a Value Web. In other words, we move from a linear development of the flow of collaborations in the creation of the product, to an “unstructured”, branched and dynamic flow (which adapts to various product variations) in which each point works in synergy with every other point (this can happen today thanks to the existence of the Web).
The characteristic of the new Values Web are:
● distribution of production facilities on the territory. The trend towards the de-localization of product development in the new dimension of Smart Fabrication, with a final phase that can be located anywhere in the Globe (for example with new versions of transplants and Franchising production©) leads to the need to extend the Values Web to global level, <see “New Production / Distribution methods: Franchising-Transplant Factories” >
● opening of the Values Web to operators who do not participate in the current “chain”:
– the Customer of the product.
– anyone who wants to contribute to product development: the Crowd, Company employees, etc.
The introduction of the Values Web therefore also involves a change in the partnership relations. Not only is it necessary to have a greater integration of the Partners distributed on the Globe; but it is necessary to redefine the methods of collaboration. The Company must therefore be able to work with the Partner in both directions: it must also be able to receive input from the various local Partners to improve its product.
Diversity is one of the key words in the new era (it is the opposite of the “unification” of many aspects of the products of the current mass market).
Today it is therefore necessary to offer products able to satisfy any peculiarity of the needs of the specific Customers (or, more generally, the needs of the geographical area in which the Product is offered). This is possible with the production flexibility offered by Smart Fabrication.
OPENING TO THE USER DRIVEN MARKET
As previously described in the “Bottom-up Values” Rule, in the new dimension of disruptive innovation the Customer from a passive element (in which its intervention is limited to the choice of already existing products), becomes a pro-active element (Connected Proactive Consumer).
In this way
– the foundation of the Business is recovered: the entrepreneur’s capacity for intuition (now replaced by a Manager) who is able to perceive a need to be satisfied (a potential Demand) – the lack of this capacity is at the origin of the current sales crisis. <see The Entrepreneur’s DNA >
– it goes beyond this condition, bringing the owners of needs (Customer) directly into the product development process <see Towards a New Marketing (1): beyond the Analytic Marketing, toward a pro-sumer Market >
QUICK AND ECONOMIC STARTUPPING
For the success of a business in the new era, it is crucial to define projects that allow for rapid and economical startupping.
One of the competitive advantages of disruptive innovation consists in the possibility of creating a new Market segment in which you are First Mover. It is basically a question of creating or coordinating in an optimal way
– a “chain” of partners in sectors compatible with what one wants to create (for example, in the Automotive sector, small producers of household appliances can collaborate in the production of the new generations of City cars) .
– small local producers with traditional skills (electronics, mechanics, etc.): with the new Smart Fabrication production methods – an evolution of the “Makers” modality – high skills are not necessary (we remind that the product will be produced with a mixed formula: some parts will be imported and assembled on site, while others will be created in these workshops with new economic and flexible tools). <see “New Production / Distribution methods: Franchising-Transplant Factories” >
Operationally, in order to make the most of the enabling technologies and the “practices” of the new market, it is also necessary to provide:
● a rapid and economic Design/Prototyping.
● an implementation in the product of consumer technologies now widespread in the devices of a few dollars:
– the consumer technologies, and the “makers” cards (like Arduino) are easy to implement: there is no need for complex equipment, nor a high level of skills for their implementation. And in this context the prototypes can be built quickly, at very low costs (the partners of the various sectors are technically able to develop prototypes quickly.)
– and it is therefore easy to find local “workshops” able to develop the final phases of production (they can rent easy-to-use tools, with which it is possible to pass quickly from the processing of one product to another).
As mentioned, one of the characteristics of the next Market is its transformation from Global to Local (or rather to G-Local). [Rule “Proximity Business – from Global to Local”}
Localization occurs not only for the distribution aspect, but also for the Production aspect.
The new Proximity Production mode allows to easily and quickly, in an extremely economical way, light “production lines”, quickly adaptable to different productions.
With the new software and hardware technologies it is possible to operate in “remote production” modality (and of Franchising production <see “New Production / Distribution methods: Franchising-Transplant Factories” >).
It is therefore crucial to develop the products of the new generation taking into account the following characteristics:
As already mentioned in some previous Rules, it is necessary to be able to develop forms of Distributed Production°, ie to be able to:
● manage Values Web° instead of Supply Chain. In other words, it is necessary to use systems for the management of product development and production capable of having the maximum integration of the partners distributed on the globe. But it is also necessary to redefine the methods of collaboration. The Company must therefore be able to work with the Partner in both directions (output and input): it must also be able to receive input from the various local Partners to improve its product.
● develop an open and “non-hierarchical” structure: which has the ability to integrate new partners at any time (even the customers).
The structure must be characterized by “non-hierarchical” collaboration and co-creation links: each level must be able to interact with any other level (in both directions, of output and input). In this way everyone benefits from the skills and intelligence of the other. And a collective intelligence develops (which is also widespread Intelligence) which increases the value of the Product.
● Technically speaking, we must base ourselves on a Framework able to provide not only an “file” output, but, among other things, to support the local partner “remotely” (being able to remotely control the machines, operating in “videoconference, etc …) ..
One of the peculiarities of the new distributed Market is a radical change in the distribution of the Product. For example, there is a transformation of intermediation.
Intermediation is considerably reduced, and features change: intermediation goes from being a minus for the consumer (it does not bring benefits to the consumer, but only an increase in the price), to be a plus (in this case the intermediary “adds value to the product – for example the consulting component).</p