There’s been a lot of talk this past week in the press about disruptive innovation. What it is and what it isn’t.
The fracas started with a recent article by Harvard history professor Jill Lepore in The New Yorker. In it she indicts the theory of disruptive innovation for being based on an unsound and arbitrary definition. Slate Magazine fired back, saying:
“Overused and reified as the phrase ‘disruptive innovation’ has become, it remains useful as a descriptive model for understanding how incumbent businesses can sometimes struggle to fend off smaller startups peddling seemingly lower-quality products.”
At the center of the controversy is Clayton Christensen’s theory of disruption from his book The Innovator’s Dilemma. The Harvard Business School professor and author defines disruption in a specific way. He describes it as a process by which “technologically straightforward” services and products target the bottom end of an established market, then move their way up the chain until, eventually, they overtake existing market leaders.
In common usage ‘to disrupt’ simply means to interrupt the normal course of things.
At PARC, we’re betting you care less about the definition and more about how emerging technologies will impact your business. (For the purposes of this article, we’ll use the more informal definition of ‘being knocked off course’.)
In our conversations with innovation officers, we hear repeatedly that they are already feeling the effects of disruption. Both their relationship with the customer and their value chain are being dramatically impacted forcing changes in their business models. Companies no longer want to be at the mercy of The Next Big Thing. You’ve told us you want to exert some level of control. Fundamentally, mastering disruption means understanding the trajectory of your business and the trajectory of technology so you can anticipate when and where the two are likely to intersect. That’s a challenge on a number of levels, but mostly because it involves hitting a fast moving target and being able to recognize incipient business models.
The Need for Speed
It’s not your imagination. The pace of invention truly is accelerating. In 2013 over a quarter million utility patents were granted. In 1980, only about 62,000 hit the books. That’s a 4.5x increase in just over 30 years. Proliferation of technology is so great that each new innovation seems to spawn a cluster of parasitical inventions. Smartphones, for example, play host to a constellation of solutions and services designed to speed communication, inform, and entertain.
Follow the Money
By its very definition emerging technology will be nascent, ill formed, and appear to be ineffectual. It’s hard to recognize as useful. It’s even harder to understand how to monetize. The trick, it turns out, may be to look outside your industry for ways to complete the value chain. To follow the money wherever it leads. Amazon’s Fire is a great example. Since when does Amazon make phones? Since it allows them to close and own the technology loop for purchasing.
The real discussion around disruption then becomes about keeping up. If you don’t want to be blindsided, how do you anticipate and react to an industry-changing shift? Or, even better, how do you be the first to connect the dots to commercialization?
At PARC we do three things:
1. Network Early and Often
We’re fortunate at PARC to have scientists and technologists who focus on theorizing and anticipating future possibilities. Because we’re not tied to any one technology or field, we have the ability to explore the uncharted. Even so, we’re constantly reaching out and connecting with others. Like a spider’s web, the first vibrations of change can often be felt at the farthest reaches of connection. Not every organization can have a team of researchers at their disposal, but it’s stunning how much sooner you can spot a trend when you have a broad network.
2. Look Both Ways at Intersections
Spotting an emerging technology is one thing. Knowing what to do with it is another. For a discovery to have import it must have application. And to understand potential applications requires a wide field of view. It means looking across multiple disciplines and categories simultaneously to discover intersections. The point at which two or three technologies converge is the point of make-or-break innovation. For example, where might healthcare, hardware, and data meet in a profound way?
3. Imagine a Customer
It’s these converging intersections of technology that also enable the delivery of new value to customers. Take the Internet of Things (IoT). Its implementation requires three key innovations: low cost, smart sensors, high bandwidth and secure networking, and data analytics to provide intelligent services. At this intersection, application, industries, and disruptions are endless. It’s easy to imagine digital cities as one example of a grand application of the IoT. It could involve weather, parking, predicting, payments, energy, and much more. But to move toward a working business model requires one more thing: imagining a customer. Who is waiting to pay and why?
The reason disruptive innovation looks impenetrable is that companies are heads down inside their industries. It’s often hard to see outside the walls. The challenge is to learn to embrace overlap. Technology now touches all of our lives, literally from the time we’re born. The pace and kind of change we’re experiencing today forces novel combinations. Today, more than just being technology agnostic, businesses and governments must be pro convergence. Exerting control over innovation means looking for novel, combinatory solutions – and partners who know how to deliver in that space.
Focus on that and someday academics will be arguing about terminology from your case study.