Now we come to the third type of innovation: disruptive. Disruptive innovation is about creating new markets or displacing incumbents in existing markets. In the strict definition proffered by Clay Christensen, disruptive innovation creates a simpler, more accessible, less expensive product or service that opens an untapped market (generally down market). Today disruptive innovation is often accomplished by employing new business models and leveraging proven digital technologies.
The cultural characteristics underpinning successful disruptive innovations are somewhat unique and not necessarily ones that you want to foster throughout your entire organization. For consideration:
Cultural Characteristics of Successful Disruptive Innovators
- High risk tolerance – contrary to the sentiment in the movie Apollo 13, failure IS an option; in fact, it’s an expectation. In your core business, how much failure can you afford. Those responsible for operating your business need to have a mindset closer to that expressed in Apollo 13, “failure is not an option.” You need to perform and deliver as flawlessly as possible every time. So there is a cadre in your core business that you do not want operating with a high risk tolerance.
- Not constrained by “how this might impact our core business.” Disruptive innovators must be free to explore solutions that may cannibalize or completely displace your core business. The focus is finding a better way to satisfy the “job to be done.” This may mean completely obsoleting significant company assets and long-term commitments. For those in your core business, there must be a sensitivity to maximizing the return on corporate assets. Throwing out current assets and starting all over is not an option you want your core operators focused on.
- Metrics? What metrics? Applying typical success metrics to disruptive innovation is misguided at best and more likely fatal to disruptive innovation initiatives. While ROI may be an excellent measure for prioritizing efficiency and sustaining innovations, it is nonsensical when applied to disruptive innovations. Do I want my core business to be concerned about ROI? You bet! Should that be a focus of my innovation team? Absolutely not, at least not in the beginning. The innovation team needs success metrics related to learning and validating hypotheses. Fundamentally, the metrics that drive behavior of operators are necessarily different than the metrics driving the behavior of disruptive innovators.
- Open, radical collaboration. Disruptive innovators need to operate in open, collaborative environments. Working with customers, suppliers, outside business and technical resources, trade associations, and perhaps even competitors are often necessary for disruptive innovators. Open environments strain the typical view of protecting intellectual property and potential strategies. While this may be ok for my disruptive innovation teams, I generally do not want my core operating teams functioning with a cavalier attitude about intellectual property and core strategies.
The above suggests ways in which the culture of disruptive innovators and core operators are necessarily different. For this reason, it is often beneficial to have an “innovation veil” of separation. Organization create an innovation veil in various ways. Decades ago, skunk works became a popular approach. Today we see corporate innovation labs, incubators, and accelerators. All of which attempt to provide some separation from the core business. Another critical reason for employing such separation is the presence of “corporate antibodies.” Below you will find links to a few interesting articles about corporate antibodies.
We at The Disruption Lab often counsel corporate executives to move disruptive innovation to the edge of the organization. That may take the form of an internal innovation lab or even better an outside collaborative lab environment.
- CULTURE MATTERS. But the culture that promotes disruptive innovation isn’t necessarily the culture that makes your core business successful day in and day out. This is one of the reasons large organizations often split off and insulate groups working on disruptive innovations.
- DO NOT think we are deemphasizing the importance of innovation in your core business. Nothing could be further from the truth. Businesses that don’t continually improve and innovate will soon become irrelevant. EVERYONE in your organization must embrace a culture of innovation. The distinction here, however, is that not everyone in your organization should be guided by the culture necessary for successful disruptive innovation. There is a difference.