Disruptive Innovation… Displace-Replace-Create: Transforms What Exists–Invents What Doesn’t–Obsoletes Marginal Value…

Disruptive Innovation: Disruptivators that we admire– the crazy ones, the misfits, the rebels, the troublemakers, the round pegs in the square holes… the ones who see things differently — they’re not fond of rules…

You can quote them, disagree with them, glorify or vilify them, but the only thing you can’t do is ignore them because they change things… they push the human race forward, and while some may see them as crazy ones, we see genius, because the ones who are crazy enough to think that they can change the world, are the ones who do.

Disruptive innovation creates new markets, displaces-replaces existing markets, drives new growth, creates new opportunities, forms new companies… Few industries today are safe from the threat of potentially wrenching competitive and technological change…

The term disruptive technologies was coined by Clayton M. Christensen and introduced in his article ‘Disruptive Technologies: Catching the Wave’, which he co-wrote with Joseph Bower and further describes the term in the book ‘The Innovator’s Dilemma’. The central theory of Christensen’s work is the dichotomy of sustaining and disruptive innovation. Sustaining innovation hardly results in the downfall of established companies because it improves the performance of existing products along the dimensions that mainstream customer value.

Disruptive innovation, on the other hand, will often have characteristics that traditional customer segments may not want, at least initially. Such innovations will appear as cheaper, simpler and even with inferior quality if compared to existing products, but some marginal or new segment will value it…

According to Geoff Vuleta; disruptive Innovation as a core incompetence is as much a pro-company idea as it is a blunt reality check for many. Companies are not geared for disruptive change in large part because they have never had to be. Disruptive innovation provides an example of when common business-world advice to ‘focus on customer’ (stay close to customer, listen to customer…) can sometimes be strategically counterproductive.

While disruptive innovation is seen and understood in retrospect, it’s debatable whether it’s transferable into a formal, repeatable process. In today’s turbulent environment, leading disruptive innovation is more about best principles than best practices, and requires a disruptive approach to management itself. Whether going after disruptive innovations that leapfrog competitors and customer expectations, or focusing on ‘blue oceans’ that represent white-space opportunities to create entirely new markets, the leadership issues are similar.

Leaders must embrace ambiguity, live with uncertainty for long periods of time, and confront the critiques of naysayer both inside and outside of their organizations. According to Jeff Bezos; any time you do something big, that’s disruptive, there will be critics

In the article Leading Disruptive Innovation by Soren Kaplan writes: In today’s complex, dynamic world, having a disruptive innovation capability is mandatory, both for growing a business and protecting existing markets. But leading disruptive innovation requires new mindsets and behaviors, for leaders themselves and for the organizations that develop them.

Disruptive innovation that transforms or creates new markets has become the Holy Grail for many companies. Leaders today, however, face a big challenge when it comes to disruptive innovation. Many executives rise through the ranks of management, where predictability-control are valued and rewarded. Unlike operations management, disruptive innovation– whether creating or responding– involves uncertainty. Unexpected events, inevitable failures, and a fundamental lack of control are inherent to the process.

But few leaders are formally prepared to deal with realities of leading or responding to disruption. Perhaps the most defining characteristic of disruptive innovation is the great uncertainty that it creates for leaders, organizations, and entire industries. While most organizations possess a general awareness of the importance and necessity of disruptive innovation and change in general, there is a gap when it comes to understanding the deeper leadership qualities necessary for driving them. For example, many leaders rely on research and data for decision-making to manage daily operations, but during times of disruption, waiting for hard data to make decisions can quickly result in failure.

Leaders must be comfortable using whatever information they have on hand, integrating inputs from diverse sources around them, and then using their intuition to round out the decision-making process. The challenge for any business is that the competencies necessary for leading disruptive innovation are not formulaic or quantifiable.

According to Gary Hamel; new problems demand new principles. Put bluntly, there’s simply no way to build tomorrow’s essential organizational capabilities– resilience, innovation and employee engagement– atop the scaffolding of 20th century management principles. In an age of wrenching change and hyper-competition, the most valuable human capabilities are precisely those that are least manageable.

Few business schools, let alone companies, prepare their leaders to live with being misunderstood or criticized, especially for extended periods of time. When it comes to leading for disruption, recognizing that ‘the soft stuff is the hard stuff’ can make the difference between success and failure. Five strategies that begin to address inherent uncertainty of disruptive innovation and cataclysmic change are:

  • Listen–Start with yourself, not the market: Contrary to conventional wisdom, disruptive leadership is not about analyzing customer needs, creating specifications to meet each need, and building great products and services to meet them.
  • Explore– Go outside to stretch the inside: Leading through disruption requires an agile mind that appreciates ambiguity. Disruptive innovators know uncertainty contains as much opportunity as it does risk.
  • Act– Take small simple steps, again, again..: Disruptive leadership involves putting a flexible stake in the ground around a specific opportunity, and then taking a series of actions to intentionally challenge assumptions and rapidly change direction as many times as necessary.
  • Persist– Take the surprise out of failure: Leading for disruptive innovation involves creating ‘optimistic persistence’ in order to combat fear, pessimism and the tendency to retrench back into the safety of the existing business model.
  • Seize– Make the journey part of the (surprise) destination: Leading disruptive innovation is a process fundamentally laden with surprise, the core essence of uncertainty.

In the article Disrupt Yourself by Whitney Johnson writes: If it feels scary and lonely, you’re probably on the right track. The term ‘disruptive innovation’ has become an industry buzzword. We all want to start a disruptive company or invest in disruptive ventures, but in reality an innovation that takes place at the low-end of the market or where there is no market (yet) is just not that sexy. It’s a similar story when you contemplate disrupting yourself mid-career. There is the possible loss of stature and influence and the very practical loss of financial stability… Since disruptive innovations are in search of a yet-to-be-defined market, we can’t know the opportunity at the outset.

According to Christensen; markets for disruptive innovations are unpredictable, and therefore your initial strategy for entering a market will be wrong… Likewise on the personal level, the checklist of conventional planning doesn’t work either; disruption requires discovery-driven planning and it’s an unnerving and unpredictable path…

According to Amar V. Bhide; in 90% of all successful new businesses, the strategy the founders initially pursued didn’t lead to business’ success... Likewise on the personal level, nearly everyone hits a point in their life where they examine their trajectory and consider a pivot. We typically label this mid-life crisis, but isn’t it more often a re-thinking as to which performance attributes matter? Perhaps earlier in your career the metric was money or fame, but now you want more autonomy, flexibility, authority, or to make a positive dent in the world…

Firms seeking growth via new markets are 6x more likely to succeed than firms seeking growth by entering established markets, and the revenue opportunity is 20x greater. It’s counterintuitive, isn’t it? When we start in a place where no one else wants to play, where the scope of the opportunity appears limited, the odds of success actually improve.

Likewise on the personal level, perhaps you too are ready to disrupt yourself. Maybe your hand is forced by downsizing or new technologies are automating you right out of relevance. However, if you are really looking to move the world forward, begin by innovating on the inside and disrupt yourself…

Disruptive innovation, by its nature, destroys entire industries or segments of industries by making them obsolete. If you simply measure the economic impact on the fact that some industries are no longer present, or that those products are no longer being sold, you could argue that there’s a negative impact on the economy. But the nature of innovation is that we make things obsolete by making other things better and more powerful and changing the way we do things.

The end result is, generally speaking (and, yes, there are exceptions), better for everyone, enabling them to do more with less and do so more productively. Progress has an amazing way of destroying old ways of doing business, and we shouldn’t fear or worry about that, we should celebrate it. More and more leaders and companies recognize that they must proactively disrupt or risk being disrupted.

But business-as-usual leadership, where big visions are followed by detailed roadmaps and action plans do more than stifle disruptive innovation: They represent liabilities to success. Leading disruptive innovation involves adopting principles that fall outside the traditional training of managers and leaders.

New leadership competencies are required to navigate disruption. This means uncovering one’s deeper motivations to drive meaningful opportunities for others; pushing personal boundaries to challenge one’s assumptions; taking steps into the unknown with the view that failure isn’t failure at all but rather a stepping stone to learning and progress; and tuning into surprises as a kind of portal for gaining new insights and uncovering opportunities.

To lead disruptive innovation successfully requires that we disrupt the most fundamental mindsets and behaviors that have led us to our current success. For example, six-sigma and Kaizen and all other pearls of corporate wisdom that were, traditionally, foundation for business success, but are now minor players in the rapidly moving and highly competitive digital age.

An estimated 65-75% of all new products that established companies introduce into their markets fail. Business history is littered with wounded and extinct companies that failed to pursue disruptive innovation. Since companies innovate faster than customers’ lives change, most organizations end-up producing products that are– too good, expensive, inconvenient for many customers.

By only pursuing ‘sustaining innovations’ that perpetuate what has, historically, helped them succeed, and companies unwittingly open the door to ‘disruptive innovations’– simpler, more-convenient, and lower-cost products… Although disruption is the key to new growth, companies must never ignore their core offerings and continue to pursue ‘sustaining innovation’ to maintain growth, as well…