Every startup company touts its new product as "disruptive" and "game changing", it seems, to the point that we often tune out the hype entirely. But what makes a product disruptive? And why settle for mere disruption? Why not go even farther than that?
In The Innovator's Dilemma and The Innovator's Solution, Harvard Business School professor Clayton Christensen differentiates between sustaining innovations that extend the features of a product incrementally, and disruptive innovations that threaten to sweep away the current generation of products.
As examples, Christensen draws on the rich data available on the disk drive industry, as drives steadily decreased in size. With each new format, the top customers found little value in a smaller format that cost more per unit of storage. As a result, business leaders at the most successful companies made the entirely rational decision to sideline the products. Meanwhile, new entrants found different customers, and transformed their toehold in the market into an ever growing position that eventually edged out the incumbents.
While re-reading the case studies, I found myself asking: is it really so disruptive to make a smaller disk drive?
I'm sure you can easily think of a dozen examples of a higher standard of innovation: Facebook, Google search, TiVo, the iPod and iPhone and iPad and coming iTV, the Amazon Kindle. Then theres the digital camera, keyless entry, on-demand video. And what about the internet? The desktop operating system?
All of these, I would consider truly radical innovations. They didn't merely improve a little on one important dimension, like size or storage density. They invented or reinvented product categories. They changed how we think about items we take for granted, like books, office work, entertainment and music.
Disruptive innovations may be disruptive in the sense of upsetting market leaders and making good money for investors and startup founders, but they may not really change much about how people live and work. Truly transformative innovations deserve to be analyzed and appreciated separately. That should start with a name. I call them revolutionary innovations.
A revolutionary innovation creates an entire new market, like the App Store ecosystem. Revolutionary innovation changes how people relate to their environments. It changes how people live, how they spend their time, what they value. Revolutionary innovation opens up new possibilities that few people ever thought of before.
Here are three simple questions to help classify innovation as sustaining, disruptive, or revolutionary.
Does the innovation quantitatively improve on a recognized and valued product attribute, without changing the feature tradeoffs?
If yes, the innovation is sustaining.
For example, greater storage density improves disk drives in a way customers care about. They can fit more in the same space, purchasing fewer units and perhaps saving money on total storage. This is an example of sustaining innovation.
Sometimes a sustaining innovation happens to come from a new entrant armed with sufficiently strong patents and trade secrets that they succeed in challenging the incumbents. Even then, they haven't disrupted the industry. They've merely replaced the leader: same politics, different president.Does the innovation quantitatively improve on the state of the art in one way, and perhaps even perform worse in another, creating a different value proposition that segments the customer base in a new way?
If yes, the innovation is disruptive.
For example, smaller sized disk drives with a higher unit cost of storage do not appeal to large established customers who care about storage cost above all. But the innovation creates a tradeoff that segments the market. New customers -- smaller companies with more modest storage needs -- find the lower up-front cost and small size appealing.
Does the innovation qualitatively change what product attributes customers recognize and value?
For example, the Amazon Kindle enabled customers to purchase books from anywhere and begin reading in seconds. Readers could carry an effectively unlimited number of books with them, in a lightweight form factor. Unlike other digital media, the e-ink screen can be read easily in full sunlight. The Kindle created not just a lighter, thinner book. It changed the entire experience of acquiring, carrying and storing books.
By asking these three simple questions, we can segregate innovations in a relatively objective way that is open to study with empirical data. By looking at each type of innovation, and comparing firms' performance and characteristics when developing each, new insights will emerge. Exciting stuff.
Innovation is all the rage in business schools and in business. For good reason. Products that capture people's imaginations and transform their lives are not only joys to behold. They can be sources of enduring value that benefit consumers, employees, producers, distributors, retailers, partners, shareholders, regional economies and the world.
The academic study of innovation is itself a revolutionary innovation. Christensen and a growing community of researchers and consultants have transformed how businesses think about competition and success. That's no small accomplishment.
What's the Recipe for Innovation?
Building Blocks of Innovation
Product Innovation and Behavioral Economics