Today we read (increasingly often) that
Disruptive Innovation is not what Business really needs.
Or even we hear that the principles of Disruptive Innovation are false arguments, and are spread to create chaos in the Market, and weaken the established business.
Whether these statements are true or not,
WE ARE AT THE POINT WHERE IT IS NECESSARY TO VERIFY (OR REFUTE) THE VALIDITY OF THE PRINCIPLES OF THE DISRUPTIVE INNOVATION.
In this regard, it is not a question of answering the question “Is Disruptive Innovation Theory founded?”, As many do. But more “scientifically”, it is necessary to ask:
1. Does Disruptive Innovation work?
2. Does the innovation practiced by the Established business (of the Incumbents), the so-called Sustaining Innovation, continue to work?
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Since the Market crisis is a fact (strongly decreased sales level, unemployment, etc.), and that the need for change is recognized by both innovation “parties” (the question is which direction to change), it is it is necessary to make an effort to clarify what choices we have to make for the business.
In this sense it is necessary, in order to have an answer that provides practical indications for the Business, to deepen the topic by asking:
● if the innovation of Incumbents has problems, what are these problems?
● if Disruptive Innovation works, what are the new Rules to apply?
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Today this reflection is practically nonexistent: there are two “parties” of the Market that act in different directions (Sustanining and Disruptive), but apparently without there being a real awareness of what the two roads actually represent (the only fundamental contribution is the Clayton Christensen’s book in “Competing Against Luck”, in which he corrects his initial thesis: but the importance of this text seems not to have been understood).
note: when it comes to success, it is intended that a company has created a business that has led it to dominate a market segment (in a position difficult to attack by others – as it was for Airbnb).
The verifiability of the disruptive innovation validity
Specifically, it is necessary to understand how beyond the dissertations on the theories of Innovation,
THE SUCCESS (AND NEED)
OF THE DISRUPTIVE INNOVATION
CAN BE VERIFIED BY THE FACTS.
As in all clarification processes, in this case it is necessary to separate opinions from facts. Issue that today we tend to ignore.
The fact is that today Business is so immersed in the dimension of “narrative” on which its Marketing is based, that it tends to be the victim of the fiction of those who present themselves as “experts” (Consultants, Professors, Media, …).
And these “experts” tend to sell strategic solutions that, in hindsight, lack a rational foundation <see Disruptive innovation in practice [3]: the charade of the Disruptive Innovation>
<see The new Value proposition: the problem of ethical (ideological) values >
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The fact is that, precisely,
THERE IS “OBJECTIVE” PROOF
(the rational, scientific demonstration,
beyond one’s own convictions)
OF THE VALIDITY (AND OF THE NEED)
OF THE DISRUPTIVE INNOVATION.
In fact, the answers to the following questions indicate whether the Disrutpive Innovation theory has a real validity; and whether its application is actually necessary.
1) Are successful startups developed today in the Disruptive Innovation mode?
2) What kind of innovation do businesses that are in serious difficulty apply today?
The two fundamental questions about the validity of Disruptive innovation
(Note: here we talk about the Consumer market: the case of high-tech B2B supplies can be different)
1) Are successful startups developed today in the Disruptive Innovation mode?
The fact (it is not a belief, but a concrete fact) is that
the most successful startups in recent years
are based on the Disrutpive Innovation Rules.
See the cases of Netflix, Facebbok, Twitter, Wikipedia, BlaBal Car, Airbnb, Whatsapp, Skype.
It is true that not all of these startups are based exclusively on real disrutpive innovation. But they all still followed the basic Rules of Disruptive Innovation.
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There is talk of a worldwide breaktrhough success that led these startups to dominate a Market sector (created by themselves, of which they are therefore First Mover), with a competitive advantage that in the medium term protects them from threats from competitors (see Airbnb).
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In other words, the fact that the startups that have achieved the big success are all based on Disruptive Innovation is a condition verified in fact – this cannot be denied even by the most avid opponents of the validity of the Disruptive Innovation theory.
Wanting to move theoretically, it is therefore possible to say that
the Disruptive Innovation theory
is actually (“objectively”) valid.
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For operational indications – which can be a valid support for developing winning strategies – what remains to be verified are further details of the criticality and positivity of the development of innovation in the current market situation. That is if:
– the type of innovation practiced in recent decades (Sustaining Innovation) is at least equally valid (see the next chapter).
– how much does each of the two forms of innovation affect the difficulties encountered by the Business today (see the second question below “To which category of innovation do the businesses that are currently in serious difficulty belong?”).
The absence of Startups for breakthrough success of Sustaining innovation
So among the Startups the most successful cases are Companies that develop Disrutpive Innovation. And there are no success stories of this level based on Sustaining Innovation.
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Some considerations on the Sustaining Innovation business: this form of business is today developed by
● ESTABLISHED BUSINESS: success based on Sustaining Innovation is achieved by Companies that have consolidated their position in recent decades (the Incumbents), and not by Startup.
Established business (Incumbents) is practically the only one that can be successful in the development of Sustaining Innovation (the evolution of “technical performance”), since only these Companies have the possibility to develop evolutions (complex) of existing technologies (they they have invested in R&D for years – think of the cases of Viagra and the Metro lines without a driver).
This path cannot be followed by Startups that are based on limited investments.
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In addition, the established Business can resort to the typical business tricks of the last decades (liason with Finance and with public institutions).
Some tricks followed today by the Incumbents (and by Consultants, Venture Capitalists, Foundations, etc …) ● support from government institutions (financial support, protection laws, etc …) ● expansion into the underdeveloped Markets of the “Third” World” (In this way they sell the current generation of low quality solutions that they can no longer sell on the “civilized” market – placing themselves in the position of being eliminated by the next disruptive suppliers offering quality products) ● operating in the pseudo-market of services managed by the State (for example in Healthcare, a sector in which with the spread of state assistance managed by the Public Administration, it is possible to have orders that do not have to deal with the choices of the Customer – the PA pays directly).
<see .Guidelines [3]: Table for Assessing Disruptive Innovation >
● STARTUPS: the few startups based on Sustaining Innovation are not actually successful.
Paradoxically, these StartUp are classified as Companies based on Disruptive innovation, although they do not belong to this category at all (in fact they are based on Rules of Sustaining Innovation).
<see Be careful: most successful companies are not real innovators (disruptive innovators) >
An example is Tesla, which does not make a profit: this Company is based typical ticks of established business that have allowed it to obtain huge public fundings; and on the money that comes from going public.
Tesla is the typical case of Company Sustaining considered (by many) as Disruptive at the media level: in reality it does not present any characteristic of Disrutpive Innovation (a radically new product that develops a service for the Customer, which defines for itself a new market).
Tesla is based instead on the Sustaining Innovation Rules: “image”, high technology, etc …
The Testa case, among other things, teaches how, for a Startup, applying Sustaining Innovation becomes a problem because it is placed on a level that can be easily attacked by established Business. That is, by those who are able to offer a product at a lower price (which BMW is doing, which is able to offer a similar product at a clearly lower price).
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There are countless famous cases of Startup failures based substantially on Sustaining Innovation. The most significant appear to be the startups (spin-offs) launched by Google and systematically failed; or the Amazon SmartPhone.
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Successful startups based on Sustaining innovation were born in China, a market where, in fact, the Rules (Laws) are not those of the “real market” (see the case of Huawei, which is strongly linked to the state).
The media essence of the success of Sustaining innovation
The success of the Sustaining Startups is linked to one of the fundamental Rules of Sustaining Innovation: fiction.
Fiction is one of the most significant inventions of modern Marketers: it is a form of spinning that allows customers to buy a Product no longer on the basis of its real usefulness, but because it has been built around it by an “image” that creates appeal.
<see Business problems: the difference between original and current marketing >
Notice how today
this abstract dimension of Marketing
even allow
develop a success of “products that exist”
(and allow to capitalize on them advantages such as success in terms of image, and support from public institutions and financial capital).
That is the most acclaimed successful products
by Sustaining (Incremental) Innovation
are, paradoxically, products
which are still on paper
These are products based on an evolution of the performance of existing products. Which means, today, a technological evolution.
In fact, precisely, on the market these products “are not there” (in the sense that there is no marketable version of them).
See, for example, the projects of the “fiction” trends such as the Artificial Intelligence, the Autonomous vehicles: products of which there is no certainty of their reliability (indeed the results are currently negative).
In reality one of the problems of the Market is that, losing itself in the dimension of fiction, it ends up not taking into account the indications of Science, which has demonstrated (for almost a century) the impossibility of creating an Artificial Intelligence (and therefore the practical impossibility of Autonomous vehicles which are based on it) <see The misunderstanding on Artificial Intelligence: why AI cannot be the future of innovation >
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The problem with this dimension of the Incumbents market is that it exposes Companies to the possibility of Disruptive Innovation Startups to occupy what is believed to be the future market of Artificial Intelligence (and its derivatives) with real solutions to the problems (that are desired. solve with such technologies).
Bear in mind that one of the characteristics of Disruptive Innovation is to solve problems with simple solutions that, even if they do not become part of a market sector, steel their Customers (see Airbnb and the hotel sector).
Disruptive innovation can, for example, solve the problem of urban Mobility in a simple and economic way with many small “inventions” that intervene upstream of the problem of the circulation of cars (proposing, for example, types of vehicles, and movement modes, radically different from the current ones).
<see .LiteMotive: the new future of Mobility >
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Note how this dimension of “abstract thinking” is today a big problem for Incumbents:
1. since established Business, accustomed to the easy way of “persuasion through fiction” knows only the world in which people can be persuaded to buy products even if them have no real utility, it has no idea what it really is about when we talk about Customer needs (it is intrinsically unable to recognize the needs of the new Demand).
2. being the Incumbents themselves in this dimension of the mental bubble (of abstract ideas from the actual world), they are convinced by the “experts” (Managers, Consultants, Professors, etc …) to follow ways of developing the strategies that are disconnected from the actual reality.
<see Disruptive innovation in practice [3]: the charade of the Disruptive Innovation >
2) What kind of innovation do businesses that are in serious difficulty apply today?
The answer to this question is a further verification of the previous point, that is the objective demonstratine that the great successes of the recent Startups belong to the category of Disrutpive Innovation.
That is, it becomes increasingly evident how
established businesses
(the “Incumbents”)
are in serious difficulty
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Bear in mind that big companies are businesses “too important to be allowed to fail”, and therefore that these companies survive above all thanks to the support of:
● Private financial institutions that have previously invested in these Companies, and that cannot afford to lose the money invested (the Incumbents mindset leads themselves to think that the Sustaining business crisis is an accidental and temporary condition)
● Public institutions, which intervene top-down with protection laws and financial support.
But these companies have been in “intensive care” for years without showing signs of improvement.
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It should be remembered that the fundamental success factors of the Sustaining Innovation market become factors of failure in the new market (factors such as developing Technologies, Marketing of fiction, Monopoly, Cronysm, etc …).
<see .Guidelines [3]: Table for Assessing Disruptive Innovation >
The “resistance”
The Incumbents Market has developed ideological (“Cultural”) strategies for the protection of established business.
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A “Culture of convenience” has been created (by the Media, Consultants, Professors, etc.). which allows Business Consultants and Managers with a Sustaining mindset to survive.
<see Disruptive Business Consulting [1] – How disruptive Business Consulting changes >
This mainstream Culture develops forms of “resistance” to the emergence of Disruptive Innovation, the main of which is the cronysm that leads public institutions to issue Rules that protect established Businesses (see the cases of Uber and Airbnb). <see Why the “joint” between Business and Public Institutions can no longer work >
But “resistance” is also developed on a cultural level, with forms of:
● SNOBBISHNESS: an attitude of superiority is developed by the “experts” which leads to the production of texts and consultancy in which Disruptive Innovation is considered a marginal phenomenon.
<see °The misunderstanding on Innovation by Manager, Consultants and Pundits >
● NEGATIONISM (denial) is an even more radical form of resistance.
In fact, the “culture of convenience” that allows “experts” to thrive comes to attack Disruptive Innovation as a dangerous phenomenon for the Market (the actual usefulness of Disruptive Innovation products is denied).
One of the significant examples of this phenomenon is that of Jill Lepore, who identifies Disruptive innovation with “the rhetoric of disruption – a language of panic, fear, asymmetry, and disorder”; and as “competitive strategy for an age seized by terror.”
<see “The basic misunderstanding on Disruptive innovation”>
See how Incumbents are prisoners of the same Culture of convenience they created Disruptive innovation in practice [3]: the charade of the Disruptive Innovation.
For an effective assessment of the quality of a product's innovation, the "TrendInsights's Guidelines to Disruptive Innovation" was developed, which offers:
1) an essential description of the meaning and methods of Disruptive innovation, and
2) a methodology for those who want to start a Disruptive Innovation business.
3) a Table summarizing the quality of the Disruptive Innovation for an assessment of business innovation capacity (usable both for developing a new Business and for analyzing Business already in progress).
<see "TrendInsights's Guidelines to Disruptive Innovation" >
