EVERYTHING YOU NEED TO KNOW ABOUT DISRUPTIVE INNOVATION

The term 'disruptive innovation' was coined by Clayton Christensen, which refers to a process in which a product/ service starts at the bottom of a market, slowly moving its way up the ladder, and ultimately ousting its competition and becoming the market leader.

The theory proposed by the Harvard Professor states that innovation can drive new trends in an existing market with its cost-effectiveness, convenience, simplicity, and accessibility, where the status quo and high prices are the main constants. In the initial stages, disruptive innovation is launched at the bottom of the market, which may seem unattractive monetarily to the market leaders, but the product can potentially revolutionize the market.

6 examples of disruptive Innovation

  • Personal computers being disruptive to mainframe and minicomputers
  • Mini mills being disruptive to integrated steel mills
  • Retail medical clinics being disruptive to traditional doctor's clinics
  • Discount retailers being disruptive to department stores
  • Mobile phones being disruptive to landline phones
  • Community college being disruptive to four-year universities

Most brands we know today are all disruptive technologies, e.g. Google, Craigslist, eBay, Uber, Twitter, Spotify, and Skype, to name a few. Companies tend to innovate at a faster rate in comparison to the needs of the customers, ending up producing products/services above the current needs of their target market. Companies follow the sustaining innovation model, which keeps them on top of the market since it works in most cases.

Disruptive innovation initiates a new market level, attracting a completely new type of consumers. But many times, companies get stuck in the innovator's dilemma where they have a business decision to make: choose between sustaining the present market or to venture into untapped markets by researching new technologies and implementing new business models. For instance, IBM ventured into producing personal computers while maintaining its mainframe computer sales. Netflix was more aggressive in this regard since it shut down the rental service it previously provided and switched to streaming on-demand for its established client base.   Netflix is one of the most striking examples for one fact: the world is changing and the younger generations are driving that change. We need to keep up with them by adapting to their communication preferences. The next generation of consumers rather text or use social media to communicate than talk on the phone or have an in-person conversation. We need to be aware of the causes they support and adjust our products and services accordingly. As Scantlin says, "By 2020, Gen Z accounts for about 40 per cent of all customers, and they're prepared to speak with their dollars."   This new generation of customers has very specific demands when it comes to putting their trust into a product/service and they consume more conscious. Therefore, the following ethical trends will predominate in the upcoming years:  

Emerging Disruptive Technologies

  • Plastic-free produce
  • Plastic-free packaging
  • Compostable carrier bags
  • Plant-based foods
  • Natural fabric clothes
  • Clothing re-sale
  • Recycling schemes
To be fair, the average consumer is not going to be a zero-waste consumer for a long time. However, companies that embrace this trend quickly, will have a competitive advantage. So here is the crucial question

How do we stay relevant?

It's actually easier than you might think. It's about being aware of what is going on in the market and using that knowledge to your benefit. For example, biohacking may sound like some scary scientific experiment out of a horror movie, but in fact, companies are already doing it. They are analyzing how the brain reacts and what triggers reactions, using that insight to sell products. For example, Facebook has been built to create dopamine rushes that become addictive.

No matter what happensĀ  - know what your core values are. Just because the world is changing around us doesn't mean we have to be like a leaf blowing about wherever the wind takes us. Instead, if we establish our core values, we will know what is important to us and abide and follow after those things rather than chasing after the latest trend. We will then be steady as a tree, able to withstand the strongest storm. We must cultivate self-esteem, eliminate negative self-talk, set goals, and develop a vision for what we want. Then we don't have to worry about chasing after the latest technology trends, except those relevant to our purposes. We can develop clarity on what we want and pursue it in a focused, career-oriented, purpose-driven way that will benefit us, our industry, our clientele, and our relationships. This honest and visionary focus is refreshing, eliminates fear, and is, best of all, realistic. Still - if we don't keep up with the changing world around us, we will be left behind. For most of us, keeping up means staying on top of ever-changing technology, but it is more than that. It is realizing the innovative potential of the skills and assets you already have and the willingness to evolve and use them to stay relevant. Are you ready to evolve your business? We are ready to support you with tailored solutions. From innovation projects to product management training or a customized accelerator program. Contact our experts for more information.   Dominik Renner

Dominik Renner, Head of Innovation & Consulting

It is his daily business to dig into trends, finding ways to keep your business ahead of the trend. On top of that, he is a passionate "go-getter", sure to roll up his sleeves and go the extra mile with you.