Today the market is in crisis, and there is talk of getting out of this situation:
● placing the focus on technologies: but today it is clear that the competitive advantage is no longer given by technologies, but by a Smartness which consists of a “Job to be done” that the Product carries out for the Customer.
● relying on funding from Shareholders or governmental institutions (a classic case is Tesla) – but in this case the Companies put themselves in a position where they cannot develop real radical innovation.
● designing products for the future – when the Business must be developed immediately to get out of the shortage of sales situation (long-term projects, such as developing Technologies, allow new Startups to invade the market with “alternative” solutions , disruptive) .
● entering the “guaranteed” (pseudo) markets:
– 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).
But these are tricks that only delay the solution of the problems of the established Companies (making the solution of these problems increasingly difficult).
The problem seems to be on a deeper level: the conception of Business. Today the Market (and the Society) are changing radically, and the “Business Culture” must adapt to this change.
The two options of Innovation
The universal idea (which is shared by all) is that
1) innovation is the basis of the Business (it is what allows you to create better products than the competition): in a dynamic Market like the current one it is impossible to maintain the competitive advantage without continuous innovation.
2) today it is necessary to develop an innovation more driven than that needed a few years ago.
What is not universally recognized is which of the two ways of innovation is better to follow:
1) Sustaining Innovation, which is based on an increase in the performance of products (and systems)
2) Disruptive Innovation, which requires radical product innovation (and consequently an equally radical change in the company’s mindset and structure).
The problem of the Market is not in the wrong choice of the two ways,
but it is in the wrong interpretation of Disruptive Innovation
(which most try to follow without awareness).
In fact, both ways have advantages and disadvantages, and if you practice them correctly, they can be successful.
Today the lack of awareness of the real meaning of Disruptive Innovation (with which most of the Market mistakenly thinks of developing their own products) is at the basis of many of the ruinous results of the current Business (in these cases a form of Hybrid is applied innovation – Disruptive/Sustaining – which cannot work).
What is not understood about Disrutpive Innovation?
At the root of the problem is probably the misunderstanding generated by the first texts of the “inventor” of this form of innovation, C. Christensen.
The fact is that Christensen initially identified the disruption factor in technology itself. In fact, when Christensen began to develop his analysis – in the 90s – the success of the business depended on the application of technologies that allowed to create new economic products capable of putting generations of previous products out of the Market.
But then things changed in the Market:
● new technologies have become extremely simple and cheap, within the reach of a small Startup (they are easily managed by low-skilled staff): technologies, in themselves, no longer make a difference.
● people’s needs have changed profoundly: problems have arisen at many levels in people’s lives (largely due to the inefficiency of services: both those provided by established business and public ones). And the spread of a global culture that has created new expectations in people (who today see how needs can actually be met with new solutions).
It is necessary to take into account that:
– Customers due to their spending reduced by the economic crisis, can no longer afford to buy the products of previous generations.
– Customers, looking for a new way to satisfy their needs (which public and private services are no longer able to satisfy) are self-organizing by creating non-cunsuming niches (which Disruptive Innovation transforms into new Market sectors – as Airbnb, BlaBla Car did).
What does real Disruptive Innovation consist of?
Things have changed since the first version of C. Christensen’s Theory of Disrutpive Innovation. And he has well redefined his “theory”:
today what makes the difference is the “Job to be done”,
that is the ability of a product to do a “job”
that can effectively improve the life of the Customer.
[ see C. Christensen’s book “Competing Against Luck” ]
But the mainstream culture seems to have not noticed this, and continues to use the first – now obsolete – definition of Disruptive Innovation.
To understand the essence of Disruptive Innovation it is necessary first of all to understand that the change taking place in the Market was not decided by someone, but is something born bottom-up.
That is, we live in a historical moment like those that preceded the phases of radical change as it was, for example, for the French Revolution:
people live a situation that has become intolerable,
and therefore are driven by a strong need to change
(to an improvement in the quality of their life).
The change is so radical that
● it is necessary to change the way of doing business (mindset, Business Model, Structures, etc …)
● the established Companies are not able to transform themselves (but must develop fresh start, for example with spin-off).
Some key points of Disruptive Innovation:
► radical innovation and not improvement performance of existing products.
► recovery of the human factor – of the utility Value of the product (the product is “Product a service” – to Job-to-be-done).
► beyond the technological factor
► crowd driven business
► radical transformation of the ideation/production/distribution process
The real problem of the Market is that today, as happens in epochal changes, “the establishment” (Market, Politics, etc …) cannot understand the change (and therefore does not understand the need to change). For this reason, today the established business is convinced that it is possible to continue on the old road, making only small changes to the strategies.
Today, therefore – as in the tale of the Fox and the grapes – it happens that the established Business is developing a denial Culture. It is a Culture of convenience created by the Media, Consultants, Professors, etc … which allows Business Consultants and Managers with a Sustaining mindset to survive.
This culture produces fatal damage to the Business, because sooner or later the problems that are thought to be solved in this way will emerge in an even more difficult way to solve.
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).
The topics above are developed in the Articles of the TrendInsignts site. And in particular in the Collection of Articles (see index below):
► Guidelines for Disrutpive Innovation; and
► Disruptive innovation in practice.
DISRUPTIVE INNOVATION IN PRACTICE (Collection of Articles)
● The redefinition of the term Disruptive by its "inventor"
The essence of Disruptive Innovation it's not disruption (disorder, destruction); but it is THE "USEFUL VALUE" THAT THE PRODUCT DEVELOPES FOR THE CUSTOMER
● The two opposite meanings of the term Disruptive
Today the term disruptive indicates negative effects of disorder, destruction. But Disruptive Innovation is a great benefit for Business and Customers
● The causes of the current disruption
The paradox of Disruption is that it is the Incumbents who created it, depriving the market of the qualities needed to satisfy the Demand
● The need to develop new Business Rules
In order to develop an innovation capable of satisfying the new Demand it is necessary to understand what the qualities required for this Demand are
● A hint to the qualities of Disruptive Innovation products
The differences between the qualities of the two forms of innovation are radical: traditional product qualities and deeper forms of gratification are recovered.
Today we read (increasingly often) that Disruptive Innovation is not what Business really needs. But the validity of Disruptive Innovation is verifiable (primarily by analyzing the facts). Chapters:
● The verifiability of the disruptive innovation validity
● The two fundamental questions about the validity of Disruptive innovation
● The absence of Startups of breakthrough success of Sustaining innovation
● The media essence of the success of Sustaining innovation
● The "resistance" to innovation
Companies are prisoners of the same narrative with which they deal with customers.
The incumbents have created a cultural dimension of "abstractness" that allows Marketers a "persuasion through fiction" to purchase (which induces the Customer to purchase products that have little or no use for it).
And now the Incumbents themselves live in this "mental bubble" (of abstract ideas), for which they are convinced by the "experts" (Managers, Consultants, Professors, etc.) to follow ways of developing strategies that they are disconnected from actual reality (ie to purchase a "product" lacking in quality for them).
GUIDELINES FOR DISRUTPIVE INNOVATION (Collection of Articles)
A Guideline illustrating which are the Rules followed by the Disrutpive Inovation Business.
It contains a Table that illustrates the Keypoints of Disruptive innovation, so that we can easily evaluate the response of a Business to the Rules of the Disrutpive Innovation.
Aimed at a clarification of the negative and positive keypoints of Disrutpive Innovation: ● what are the causes of the current crisis, and ● what Disruptive innovation actually is in its specific aspects.
► Why we cannot get out of the current market crisis? / Why you cannot work on causes of problems? ► Some causes of the failure to change ► The change: some characteristic / Why the need for a disruptive innovation?
Aimed at a clarification of what are the specific errors committed by the failing strategies. And what are key factors of the winning alternatives
► Considerations on models and roles of the new Business ► Overcoming the concept of Leader and follower ► Considerations on the form of innovation / The difference between the innovation models (sustaining/disruptive) ► The change of the business paradigm and mission / Purpose of business / Comparison between Disruptive and Sustaining Innovation: the case of “electric bikes”
SUMMARY TABLE OF KEYPOINTS OF THE TWO DIFFERENT FORMS OF INNOVATION (Disruptive / Sustaining), with which it is possibile TO ASSESS WHICH FORMS OF INNOVATION ARE PRESENT IN EVERY BUSINESS.