Why doesn’t Disruptive Innovation work for most of the Market?

Today the market is in crisis, and there is talk of getting out of this situation:

<see an in-depth analysis of the following points in the  Table of Keypoints aimed at a diagnostic assessments of Business innovation capacity>

● 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).

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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.

<see .Disruptive Innovation in practice [2]: proof of the validity of the Disruptive innovation – the “resistance” to innovation>

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).

<see Guidelines [1]: Basic Q&A on Disruptive innovation  >

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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).

<see The failure of Hybrid innovation (Disruptive + Sustaining Innovation) >

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.

<see The role of technologies in innovation (the key is not technology) >

● 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).

<see New modality of Consumerism: the New Demand (Key of Changes #2) >

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).

<see Why does innovation fail today? The inability to understand in new Customer Needs >

 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.

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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).

<see The drive for change: the urgent needs of Customer >

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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).

<see The Company Immune System: why the big Companies cannot develop real innovation>

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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

<see Guidelines [2]: WHAT IS and WHAT IS NOT Disruptive innovation >

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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.

<see The “Resistance” (to Disruptive Innovation)>

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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.

<see Disruptive Business Consulting [1] – How disruptive Business Consulting changes>