Caught in the Headlights of Disruptive Innovation.

This past weekend I had an extended period of re-reading about the effects of disruption that seems to be occurring across all points of business, our politics, our governments, it seems across our lives.

I had been looking forward to a nice break up in the mountains of Switzerland, in a place near St.Moritz for five days of some walking, catching up with good friends over some great meals.

The evenings playing different card games or board games, as the temperatures dropped outside to minus six centigrade, the competitive nature raised the inside temperatures significantly. All good plans sometime get disrupted.

Regretfully a few days before, I ‘pulled’ some ligaments around the knee and this rendered the walking to some pretty tame stuff but the company, food and drink seemed to compensated a little I must admit, it eased the pain.

So I had some time on my hands so I decided to go back over the whole area of disruption to get a broader understanding and how this is driving so much within our innovation activity at present.

Disruption is all around us, coming at ever-faster speeds

Disruption has been going on around us over different generations. Something simply disrupts something else, such as the change from the horse and pony to the car, onto trains, then aircraft; or the telegraph replaced by the fixed telephone, then onto the mobile phone; or the mainframe computer to the personal computer onto today’s smartphone. Everything invented seems to have been disrupted or seems about too.

“A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leaders and alliances”             – (a wikepedia definition)

The term was defined and the phenomenon really came to a our more collective attention, through some pioneering work of Clayton M. Christensen that began back in 1995. This work highlighted today’s force of change as technology-led to bring out the changing conditions usually found in disruptive innovation occurring all around us today.

As we think ‘disruptive’ we also do need to recognize that no all innovations are disruptive, even if they are revolutionary. Equally Disruptive innovations tends to be produced or driven by outsiders as the incumbent’s fight to keep hold of their established position and regarding changing as simply as too hard with such a legacy of assets established.

It often seems the incumbent only let’s go, often in dramatic fashion, when a disruption has actually taken hold and suddenly takes off or seemingly from nowhere, catching those in established market by stripping away critical points of value within the existing market. They, the incumbent, then struggle to regain any form of leadership mostly, due to this poor recognition and preparation they should have been undertaking on an ongoing basis of exploring and experimenting.

Adopting new business practices is not so simple for the majority

Even though many of the existing incumbent firms of today have some pretty smart people they simply can’t get their heads around often their collective poor-decision making, cumbersome processes, often providing a calcifying culture and lack of bold leadership, that is opening the doors to the many inspiring disruptors.

The established firm have so tightly linked their processes, planning and planning cycles but not evolved increasingly around a higher level of fluidity, agility and extracting from a broader network. They stay resolutely internally focused with this often dominating vested interest in preserving the status-quo wherever they can.

There are so many ‘blind spots’ and lack of understanding about the power and force that technology is enabling. So many are being encouraged to actively work on new ways to enter the game and find a new model that simply disrupts and ‘slices off’ a nice part of the pie, or completely changes the way the equation of price, performance and value can be dramatically altered.

This change in the value proposition results in the consumers growing acceptance to change from the previous accepted and known. It simply shifts the market forces dramatically away and becomes unstoppable, utterly disrupting and altering perceptions and past positions. The application of technology is the catalyst that creates this disruptive process.     .

You feel the only blame is on the incumbent themselves, no wonder the talent entering the employment market are reluctant to join many large established organizations and would prefer to be part of the disruptors, in new ventures and defining and delivering new value propositions, building not defending positions, so as to deliver to customers wanting more ease, convenience and connected value than they are receiving today.

The digital technology led age, with the availability of venture money and extremely savvy techies, seeks to feed off the incumbent’s reluctance to cannibalize the present profitable revenue streams, render existing assets and investments as obsolete and see the fundamental assumptions about the business and the market as different to their own understandings.

The world of managing within a business has changed. This lack of seemingly rigorous internal constant challenging and exploiting alternative positions in real time, and exploring these through experimentation and discovery is rendering many firms unable to adapt and not be as agile and responsive as they could be. They stay often in this constant state of inertia, denial and myopia, even though they, within themselves still feel ‘dynamic and responsive’. A real dilemma that is extremely hard to get right. I feel “restless without consistent experimentation” needs to be embedded within the soul of many organizations.

They, the incumbents, see things in rational ways, based on past experience, whereas the usurper has no inhibitions and can only see inefficiencies, inept understanding of changing customer needs and fat, slow-moving incumbents. We must learn to walk in other peoples shoes to understand and ‘see’ differently.

The new cooking recipe for business disruption.

A light bulb went on for me as I sat there, near St. Moritz reviewing disruptive innovation. I remembered the terrific value we all seemed to have obtained from the pioneering work of Doblin and its ten types of innovation when it came out some years back. This allowed the collective ‘us’ to suddenly see innovations simply beyond products. We were able to combine them in new ways. The ten types of innovation framework took us beyond a stereo-type view of innovation, it opened up our thinking.

 A new framing of connecting disruptive innovation

I see the work currently being undertaken by Deloitte University Press as emerging as another important step, it allows us to frame and think disruption along recognized points of value, old and new. They have defined the nine patterns of disruption as shown in the graphic below. Incidentally the Doblin group is now part of Deliottes.

I think this has a great place to frame your disruptions, no different from the ten types of innovation.

The nine patterns of disruption (according to Deliotte)

 

Deliotte University Press has been exploring the disruptive forces at work in a “Patterns of Disruption” extended article and then providing a recent case series on these nine patterns of disruption shown above. I urge all worried or simply interested in understanding disruptive innovation to read these as an excellent point of reference. It can become a really powerful starting point to look, explore and determine ‘your’ possible points of disruption

Getting closer to understanding today’s business disruption phenomena

Here we see the basic ingredients for making change in these nine patterns and a new recipe for challenging and making change as ‘relevant markets’ can be redefined, providing a different source of value creation and recognizing that unmet need of the consumer. It might be something as powerful as the ten types of innovation in exploring the disruptive innovation points of value.

It is the new conditions of lower cost of entry and asset light, that technology is putting the potential into the hands of anyone to allow us to re imagine and recombine, to look to eliminate waste, improve choices, offer greater connected convenience, more personalization but on a different scale and scope. It is allowing us to challenge and exploit direct and indirect costs, to reduce lead times, focus upon new response times, to gain new identification and improved relationships, by connecting all the parts differently, that can create a change in finding new creation value points.

Exploring quickly, learning from these, developing the ability to pivot from this new set of insights, to firstly establish a new base line approach that taps into the right conditions and having the ability, resources and confidence to quickly scale this and mature it out into a broader offering of its interconnected parts that keep adding more value. Large established forms can achieve this, no differently than the small and nimble but in different ways, it lies in the art of orchestration, mobilization and clear, resolute commitment.

Becoming hyperaware, taking decisions and executing on these well is a great step forward for many.

We are certainly breaking faster with the past than ever. In the past we saw the future based often on the past, today we must see the future by exploring and experimenting constantly, based on our agility to recombine based on the technological potential we have increasingly available. Although all these have such a short history and are always changing we need to be more at the forefront of this exploring. It is our embracing all forms of this technology revolution that allows us to frame our thinking differently, it alters our thinking constantly and our organizations need to be set up to evolve in the same responsive ways.

We need to build a greater hyperawareness, the ability to detect and monitor changes and that is coming at increasing speed through more data flowing towards us. It is our ability to absorb this and translate its meaning in different, value-added ways to give it new value from a customer and market perspective. We also need to make better informed decision-making and acting upon these through faster execution and these ‘skills’ need to be far better put in place within most organizations. We need to cut through the existing ways of doing business as normal and challenge everything, everywhere, constantly.

We need to think of these ‘forces of disruption’ as the ‘era of displacement’ as we are all caught up in this technology revolution. The headlights are full on and blinding all of us, it is how we quickly respond will give us a better chance of emerging out of this period of (digital) technological revolution. Technology should not disable us, it should be enabling.