As can be seen from the Market trend,
the disruption is a problem for the established Compaines,
which are no longer able to interpret the Demand;
and also suffer from
the inability to change to adapt to the new Demand.
The problem is that these Companies, faced with the evidence that it is necessary to begin to apply a “radical” innovation of their offer, they are not aware of the fact that,
in a radically new strategy,
WHEN EVEN JUST A PART OF THE “OLD RULES” IS INTRODUCED,
CONDITIONS ARE CREATED FOR THIS STRATEGY TO BE A FAILURE.
In this case we can talk about Hybrid Innovation: an innovation that has at the same time key features of Disruptive Innovation and Sustaining Innovation.
In fact in the field of Disruptive Innovation, even when there is a potentially winning idea at the base of the product, if in the strategies a key element of the declining Market is introduced (Sustaining Innovation), the product cannot develop its potential in the nascent Market (this is what happens in most of the Incumbents’ attempts to develop Disruptive innovation).
it is useless to adopt some Disruptive innovation keypoints
IF YOU DO NOT CHANGE THE ROOT YOUR OWN BUSINESS
A widespread problem in the Market is that the companies that claim to develop Disruptive Innovation is that they do not understand that they must adopt a radically new Business model (of having to redefine Value proposition, Sector of market, etc …).
For this reason they end up developing a “Hybrid Innovation” Disruptive/Sustaining innovation which, even in the case in which the Marketers initially manage to sell the product, is unable to maintain the success achieved over time.
Why a Hybrid Innovation system cannot work
The problem of “Hybrid Innovation” Disruptive/Sustaining innovation consists substantially in the fact that
the two forms of innovation
that we seek to integrate
ARE TOTALLY DIFFERENT
– we could say they are “opposite”.
And so it happens that the key elements of them, when inserted into the same strategy, come into conflict with each other. In this situation, conflicts are generated, which over time cause the system to degenerate.
In other words, it is a conflict between “operating Principles”.
The problem is “scientific”: in a rational system (as are the Companies of the Market)
when the operating Principles are not respected,
RESULTS ARE OBTAINED
DIFFERENT FROM THOSE
FOR WHICH THEY ARE IT HAS BEEN CONCEIVED
In other words, when there are incompatible operating Principles, an intrinsically defective system is developed in which the various specific aspects of a strategy come into conflict with one another and begin to produce unexpected results: this leads to a sum of defects in the general strategy that over time leads to the failure of such strategies.
The problem is that these results cannot be corrected, since it is precisely the factory glitch of the system that produces them (the Company)
Examples of conflict between operating Principles
For understand how “technically” it happens that a Hybrid Innovation system ends up creating general operating problems, you can imagine a soccer team that plays zone defense (a setting that provides a collective game – not just in defense – in which it is necessary that the 11 players follow precise patterns so that they can develop a game that actually works). And imagine that in this team there should be a player who does not respect the principles of this type of game, or who plays in an individualistic way.
As this last player can be a great talent (a Maradona), with his insertion the team does not produce the results of the previous one anymore.
In this case it happens, in fact, that the insertion of an element which is based on operating Principles incompatible with the rest of the System creates a conflict within the System that causes the Principles that one wanted to apply originally (the zone defense) no longer work.
And the results are disastrous.
The fact is that either the whole team plays in the “old school” mode (players play according to their abilities, and their intelligence); or play with the modern “organized” game, in which all players follow the same operating Principles (in this case the same game patterns).
To look at an example closer to the case of a Company, we can take an example of governance like that of a Condominium.
If in a specific Condominium it was decided to rely on collective decisions (as generally happens), when a co-owner independently takes executive decisions (on behalf of the entire condominium) problems are created on several levels: interventions on the building that are or are in conflict with each other, or overlap; resentments, etc …
In the case of companies, the basic problem created by the Hybrid strategies Dirtupitive/Sustaining Innovation is, upstream of everything, that of
a lack of a truly shared Vision
since it operates
FOLLOWING THE TWO DIFFERENT PHILOSOPHIES OF INNOVATION
(the mindset of the two types of people operating within the Company is substantially different).
An example: if an Executive has a “financial capitalism” type (Sustaining innovation) mindset, it will eventually inhibit any form of Disruptive Innovation within the company.
This is because this Executive is deeply convinced that the Principles of traditional economics are the right ones to make the Company work (it relates everything to Money-value, when in the Disruptive innovation Business profits are based on the development of Thin Values, not directly quantifiable).
The Executive’s long experience tells him that it is perfectly right: in the past, things worked very well in that way; the problem is that now it must face a phase of disruption in which these Principles become a problem.
In other words, the problem with this Executive is that it has a mindset that does not allow it to understand the value of the new market trends to be followed in product design (qualities such as Sharing Economy, access economy, collaborative economy peer to peer, collaborative consumption).
Executives of established companies
in the new Market Values they see problems for the Business,
IN THE NEW DIMENSION OF DISRUPTION OF THE COMPANY
THESE VALUES BRING THE REAL PROFITS.
These are the ways in which conflicts develop within the big Companies that prevent the Incumbents from developing an appetizing innovation for new Demand.
The case of Hybrid innovation by John Deer
A significant example of Hybrid Innovation is the case of John Deer (which most pundits mistakenly consider to be a case of Disruptive innovation), which created an interconnected system (IoT) of tractors and accessories for Farming.
In this case, a Disruptive/Sustaining innovation Hybrid was created in which:
● on the one hand there are some forms of radical innovation that are the basis of Disruptive innovation, such as IoT devices (previously not used in Farming), and ITCs to monitor the work of machines.
But on the other hand,
● there is a lack of the fundamental qualities of Disruptive Innovation: that is, solutions that radically change the way in which Farming operates.
That is, in this solution a “digital farming” has developed (essentially “digitalization of machinery”, and process automation) a “technologisation” that is a typical feature of Sustaining Innovation. It is in fact an intervention with which
it only improves
the efficiency of previous operating procedures.
But that disruptive leap required by the new Demand is not carried out in the development of the product.
The problem is that digitalisation – like any innovation that focuses on technologies – is not disruptive at all: Technology, in the new Market, no longer represents a Value (technologies are only the enabler of new solutions that can satisfy the new demands of the new Demand).
The new offer of John Deer
is designed for the “Incumbents of the Farming”,
and not for the “Crowd” of Farmers
(the “small” Farmers “) – which in many cases can no longer live off their work – which expect a new type of solution that will allow them to succeed in the Agro/Food Market (a success now reserved for the Farming Incumbents).
(take into account that this last type of Demand is vastly more vast, and also includes developing countries)
The new Demand expects a solution that is not complex to manage (cost of purchase and management) like that proposed by John Deer. And that adopts the characteristics of the new Market, as features linked to the Sharing ecomomy, (for example linked to the principles of cooperation: the most expensive machinery should be able to be co-managed by more farmers).
From a purely economic point of view, John Deere’s problem of innovation is the one described in Clayton Christensen’s various texts: firstly, it makes it easier for followers to copy the system, selling it at lower prices (John Deer must keep prices high at because of the costs of pioneering): this problem does not exist in the case of solutions of real Disruptive innovation.
Another problem is the probable difficulty of the sales network in promoting the sophisticated advantages of the new solution.