Why Disruptive Innovation Doesn’t Work and What Strategy to Use Instead

In the late 1990s, when I was running the strategy group at HP, we invited Clayton Christensen, the Harvard professor who wrote The Innovator’s Dilemma and popularized the term “disruptive innovation,” to speak to us.

We asked him a simple question: “How do you do disruptive innovation?”

His answer surprised me: “I don’t know how, I just know how to describe it.”

Christensen described it well. He shared compelling examples. He argued that companies, and entire industries, can be “disrupted” by unforeseen competitors — new players that deliver products at a fraction of the cost as current options yet still meet the most important customer needs. The result? Customers leave the old way of doing things and move to the new. Existing leaders die. New leaders prevail. Disruption occurs.

Although I left HP a few years after that, Christensen’s words stuck with me.

Disruptive Innovation is Business’ Biggest Paradigm

Just about everyone wants innovation. We’ve seen the casualties of disruption: Kodak, Blockbuster, Borders, BlackBerry. And most of us want to avoid a similar fate ourselves. Better yet, we want to reap the benefits of being a disrupter — like Netflix, Amazon, and Apple.

Few people know that the fundamental concept of disruptive innovation wasn’t new when Christensen introduced it. In 1942, Joseph Schumpeter, an Austrian-American economist, described the dynamics of “creative destruction”– essentially the same thing as disruptive innovation. Then, in 1994, MIT’s James Utterback published Mastering the Dynamics of Innovation, which described how the “ice harvesting industry” was displaced by “iceboxes” (refrigerators) and how manual typewriters were stamped out by IBM’s Selectric electric typewriter. All this was years before the word “disruptive innovation” made it onto the scene.

Most people familiar with the research on innovation also know about “paradigms.” Paradigms are mental models that contain unquestioned assumptions about how things work. The world is flat and the Sun revolves around the Earth were two paradigms that were seen as common knowledge. These assumptions were accepted as truths, until they were turned upside down and replaced with an alternative paradigm. Paradigms have, and will always, exist. Just as “quality” and “reengineering” were the business world’s lenses in the 1980s and 1990s, disruptive innovation is one of today’s biggest paradigms.

The disruptive innovation movement has created a big problem for businesses. Here’s the issue: Disruptive innovation isn’t how innovation works in the real world when you’re in the process of doing it — it is obvious only in retrospect when described by storytellers.

If Steve Jobs Didn’t Try to Do It, Why Should You?

The reality is, most “disruptions” don’t start out that way. Steve Jobs, arguably one of the greatest disruptive innovators of all time, said the same thing. “When we created the iTunes Music Store, we did that because we thought it would be great to be able to buy music electronically, not because we had plans to redefine the music industry.”

Looking back, it’s probably not too strong of a statement to say that Apple disrupted the music industry. But did Jobs and Apple know they were doing it at the time? No. Was it part of their strategy? No. They created iTunes because it felt like the right thing to do to add value to customers and the world. Simple as that.

Take two other modern-day disrupters. Larry Page and Sergey Brin didn’t start Google with the intention of transforming the internet, buying YouTube, or launching Android. Their very first step was all about finding a more effective way to prioritize library searches for academic research papers online. Yes, library searches. From there, they realized they could also index webpages. And, at first, they resisted including advertisements next to the search results. Good thing for them (and Google shareholders) they changed their minds.

When we as innovators set our sights on creating a disruptive innovation, we place unrealistic expectations on our organizations, people, and ourselves. We lose sight of the realities that are inherent in the innovation process. It’s like seeking fame for fame’s sake versus simply having a great talent that leads to great performances — which then results in fame. It clouds our sense of what we’re really doing.

If You Only Swing for the Fences, You Won’t Score on Singles, Doubles, or Triples.

The theory of disruptive innovation is helpful for understanding how technology has played a disruptive role in shaping the business and competitive landscape. But when this is the dominant lens and you’re obsessed with hitting home runs, you miss a lot of other opportunities to score.

Take Kodak, for example. About 10 years before filing for bankruptcy, in 2003, the company hired the head of HP’s inkjet printer business as a “big bet” to help them jump into the printer business as a response to rapidly falling 35mm camera and film sales. It took a single swing for the fences by trying to enter a billion-dollar industry and become the low-cost provider of both printers and ink — the classic disruptive innovation strategy. The strategy missed. Goodbye, Kodak.

Unlike disruptive innovation, “incremental innovations” are minor tweaks to existing products or services in the form of new colors, flavors, features, benefits, or aspects of the customer experience that are fairly quick and easy to do. The principle behind “incremental” is much more strategic and goes much deeper than the term suggests. Small tweaks, gelled together with the right mindset and approach, are often what actually add up to big breakthroughs.

Between incremental and “disruptive” innovation lies “evolutionary innovation.” Evolutionary innovations aren’t necessarily about big bets. But they’re not about little tweaks either. They’re about trying something that feels like a bit of a stretch, and then seeing what happens. If they work, they can “sustain” the business (and ideally grow it) in the long term. Sometimes they flop. But, now and then, they go big. When they do, sometimes the storytellers look back and call them “disruptive.”

One company that has steered clear of disruptive innovation by going after modest-size opportunities is Fujifilm. Fifteen years ago, the company stood at the same starting line as Kodak. Today, Kodak has a $580 million market cap while Fujifilm has a $28.7 billion market cap. We don’t think about Fujifilm as a disruptive innovator. It isn’t. But by most measures of success, it has weathered the storm and come out the other end quite successfully. It has continued its march toward adapting to the digital world by getting into 3-D photography. It has entered dozens of new businesses, ranging from television cameras to medical products, to thin film packaging for candy. Disruptive innovations? No. Evolutionary innovation was the savior — and the company’s growth engine.

Don’t Focus on Disruption.

In today’s innovation-obsessed world, “disruption” encapsulates the holy grail. Incremental and sustaining innovations are the all-too-often overlooked steps that lead you there. The formal theory of disruptive innovation is fundamentally about technologies and products. The real world rewards those who build new business models, extend brands, create new channels, find new markets, redesign customer experiences, reinvent business processes, and other stuff that most seasoned innovators know truly shape the future.

We need to see through the veneer of today’s disruptive innovation frenzy. Real innovators fall in love with big hairy challenges, solve meaningful problems, and create exciting solutions that customers never knew they needed. Those are the seeds of real opportunity. And if you do it well, someone might look back and say, “nice disruption.”

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Nicholas ‘Nick’ Statman entered the property industry in 2001 and set up a property buying company that quickly established itself as one of the biggest in the sector. During this time the Company successfully transacted on thousands of residential properties across the UK. Nicholas Statman was an early pioneer of the ‘quick sale’ niche market which has since grown considerably with a multitude of companies now operating in the sector. Nicholas Statman has strategically built a sizeable residential and commercial property portfolio with a view to holding for optimum capital growth and a long term passive income. Nicholas Statman has been involved in almost every aspect of the property sector over a 20 year period – this includes buying and selling, development, letting and management and is now involved in the fast growing online/ hybrid Estate Agent industry.

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