In order to grow, all industries must undergo significant disruption—the business world’s equivalent of a wake-up call. Business professor Clayton Christensen first used the term ‘disruptive innovation’ back in 1995, to describe the process by which a product or service starts out in its simplest form at the bottom of the market, before moving up to eventually displace established competitors.
Creative disruption: it’s unavoidable
The waves of creative disruption – technological or digital – have caused the acceleration of change across industries. For example, 3D printing has revolutionized the manufacturing and healthcare industries, and companies such as Netflix have changed the way we consume ondemand media. Leading disruptive innovators recognize the need to move away from the beaten path of success and security, in order to connect with the engaged and empowered consumer: Apple’s takeover of the mobile phone industry, after starting out with computers, and Google’s expansion into ads, causing advertising giants to sit up and take note, are just some examples of the direction innovation has taken over the last decade alone.
How to become a leading innovator: collaboration and continual reinvention
As creative disruption continues to blur the lines between industries, and organizational leaders come to realize that they cannot continue business as usual – a concept referred to as the Innovator’s Dilemma – innovation is affecting the way many organizations operate. The life expectancy of companies has been compressed by 80% since the 1920s, and by 2021, 40% of Fortune 500 companies will simply have disappeared.
The threat of death at the hands of tradition and custom is pushing companies to collaborate in order to stay relevant, and forcing the CEOs of leading companies to ask: do we have innovation in our bones? After selling off its low-end server business to Lenovo, tech giant IBM entered into a partnership with Apple, distributing iPads offering industry-specific enterprise mobile solutions—a smart move by IBM to exploit the power of one of the world’s most powerful brands.
Another method of innovation being employed by companies is one of continual reinvention, explained by the Three Horizons model:
Horizon one: extend and defend products
Horizon two: drive emerging products
Horizon three: create new, viable opportunities
The unwillingness to let go of the old and look beyond past and current successes is something Bill Gates summed up perfectly, when he said, “Success is a lousy teacher. It seduces smart people into thinking they can’t lose.” Past success doesn’t guarantee it in the future, so we all have to be lifelong learners, beginning with the CEO.
Be brave, innovate
When it comes to innovation, courage yields the best results—and the pay-offs have been huge. Consumer goods giant Procter & Gamble’s open innovation initiative, Connect + Develop, reaches out to external talent in order to innovate and improve. The lean start-up approach adopted by General Electric allows the company to act like a start-up, by “unlearning perfection” in order to manage new product development—effectively disrupting the market with faster, smarter decisions. Digital innovation is another area Nike has influenced for some time now. Collaborating with Apple to create the Nike+ Fuelband allowed Nike to merge fitness with smart mobile technology—a bold move in uncertain times, and something competitor Adidas has been slow to adopt.
“The unwillingness to let go of the old and look beyond past and current successes is something Bill Gates summed up perfectly, when he said:
“Success is a lousy teacher. It seduces smart people into thinking they can’t lose.”
Past success doesn’t guarantee it in the future, so we all have to be lifelong learners, beginning with the CEO.”
About the author:
Mike Grandinetti Professor of Entrepreneurship, Innovation, Management, and Marketing MBA, Yale School of Management
Professor Grandinetti is an award-winning faculty member, having received four Global Teaching Excellence Awards from Hult and been named Professor of the Week by the Financial Times in 2013. He is a serial entrepreneur with extensive experience working with global start-ups and venture capitalist firms.