The ability to innovate is fundamental to business success. Innovation can mean improving existing products, processes or systems and it can also be the development of new technologies. In some cases, innovative technologies can create entirely new product lines that completely redefine an industry. These products and services are called disruptive innovations and can be the most challenging for established businesses to manage. Innovation and Disruption: Harnessing Change for Business Success is a comprehensive book that discusses how organizations can effectively implement and manage changes. The authors explore ways to improve the efficiency of business operations, increase productivity and profitability, develop talent, and build strong financial strength.
The authors also explain how to recognize when a business is being disrupted and strategies for avoiding disruptions or even becoming a disruptive company in an industry. Disruptive innovations occur when smaller companies enter a market and offer products that provide a different kind of value than those offered by established competitors. These innovations may claim an entire market segment or simply drive the larger companies out of business. They can be categorized into two types: low-end and new-market disruption. Low-end disruption occurs when the innovative entrants produce cheaper versions of existing products that compete with the lowest price point of an existing market, while new-market disruption involves developing a product or service that serves a distinct customer base that the current market doesn’t reach.
Harvard professor Clayton Christensen popularized the concept of disruptive technology in an HBR article and later in his Wall Street Journal, Business Week and New York Times bestseller The Innovator’s Dilemma. This theory contends that well-managed, financially successful businesses can be pushed aside by disruptive technologies if they fail to abandon outdated business models and invest in research and development for emerging markets. While disruptive innovations are typically considered a threat by incumbents, they are usually welcomed by consumers because of the lower cost and greater convenience. For example, the laptop computers and desktops that replaced the traditional pocket calculators and handheld calculators are considered disruptive innovations because they provided more functionality at a much lower price than their predecessors.
The proliferation of smartphones is another example of disruptive innovation, which is now a dominant force in the computer industry. A good way to approach disruptive innovation is to focus on making incremental improvements in an existing product or service line. This can be more beneficial for the company than putting too much energy into competing with other firms in the same industry, which can lead to an unsustainable level of stress and expense. It’s important to keep in mind that disruptive innovation takes time and resources to become fully effective, so entrepreneurs should approach it carefully. They should also remember that not every disruptive innovation becomes a worldwide phenomenon, such as the iPod or Tesla cars. Instead, some disruptors remain niche players that only make a small impact on their local markets. However, these niche players can eventually evolve into market leaders.