The uncomfortable truth about disruptive innovation

There will always be winners and losers from disruptive innovation, writes Trish Thompson, Product Strategist at Gallagher. Large businesses face different challenges to their smaller, more agile, competitors.

Start-ups thrive on disruptive innovation, embracing new technology and finding fresh markets to serve. Yet many large, successful businesses are slow to embrace a disruptive approach, missing out on new markets, increased profits and staying ahead of competitors.

Trish Thompson, Product Strategist at Gallagher.

Doing the same thing, expecting different results

Many successful companies are experts at incremental, or sustaining, innovation. This is the type of innovation that results from talking to existing customers, understanding their needs, and enhancing or building new versions of existing products. It works, it’s profitable, and when done well it makes a company successful.

But this approach also trains companies to only listen to their existing customers, blinding them to the future potential of break-through technologies and preventing a culture where disruptive innovation can thrive.

For example, Company X may see the innovation opportunity in a new technology, but the technology itself is not ready for the customers they currently serve. In competition for development investment, pitched against smaller, incremental projects built off existing platforms that will satisfy their current customers, the short-term business case for the new technology simply doesn’t stack up. This is where it typically dies – and once Company X is in that pattern, creating a culture where disruptive innovations can thrive is significantly harder.

If you want to build a culture of innovation then you’ll probably have to stop listening to some of the existing experts and conventional wisdom in your industry.

To be disruptive, you need to do things differently. There is seldom a guaranteed pot of gold at the end of the disruptive innovation rainbow, so companies need to be prepared to try new things and adapt and change based on the results. True disruptive innovation will change the ways in which money is made and distributed in the industry, and there will always be winners and losers.

Bureaucracy and disruptive innovation don’t mix

Another reason many large companies aren’t thriving on disruptive innovation is because of people and decision making.

Where start-ups have the benefit of a greenfield environment with no rules or restrictions and few decision makers, already successful companies don’t have the same flexibility.

While they may have no shortage of innovative ideas, there’s often no one person responsible for making decisions to keep them moving forward. The idea gets discussed in circles until it feels too hard, and then it dies.

Even if progress is made at a decisionmaking level, a company geared to serving the needs of one market in a specific way often fails to make the transition within sales, marketing, operations or elsewhere in the business to properly support the fledgling initiative.

Innovation requires as much creativity and skill in devising a disruptive strategy and approach for your company as the creativity that fires new product and service innovation in the first place.

It’s not all or nothing

It’s important to realise that sustaining innovation and disruptive innovation aren’t mutually exclusive. You can do both, with wise financial management around how to split the company’s investment between breakthrough and sustaining innovations.

Sustaining innovation is often the lifeblood of a successful business, generating profits that support new ventures and allowing the breakthrough innovation team to look further ahead. This support for a disruptive approach can in turn help ensure the business is able to survive disruptive market changes. It’s an advantage that larger, established businesses have over start-ups.

Get comfortable with discomfort

If breakthrough innovation is hard, the solution is not as difficult – just a bit uncomfortable for successful businesses, whose focus is often on a different kind of innovation.

The key is making sure the value of the disruptive innovation process is understood throughout the business, from the very highest levels and throughout every role that contributes to innovation, so that changes to culture and decision-making are supported. The rest comes down to execution (but that’s a different story).