The Salomon case study brings to light 2 fundamental characteristics of disruptive innovation: The risk factor is tiny and it’s all about passion…
Disruptive innovation, a very low-risk strategy
- Incremental innovations are much more expensive and high-risk than disruptive innovations. Improving a product that is already very good is a complicated process. R&D budgets become huge. And yet faults in the quality of a product can always happen. Product recall is very costly the world over. Or you may make the mistake of removing a feature that consumers found essential. Your whole product range is then dead and you have to start again from scratch.
- Investments are small in disruptive innovations We saw previously that technological investments are small. Similarly, the budget needed to fund community management is much smaller than that required to fund a typical media campaign. In fact, a disruptive innovation only means changing business models.
- Disruptive innovations are very low-risk : You are launching a product in an area where customers did not have a solution to their problems in the first place. You will be seen as a pioneering business who innovated in an attempt to provide a solution that was unavailable elsewhere. Your brand image will not suffer even if this solution does not find its own market. The risk is therefore minimal.
At the heart of disruptive innovations: passion!
- Salomon’s corporate culture is cultivating passion ! Salomon’s employees are all passionate about mountain sports. Here is how Patrick Pons de Vier, manager of the company’s Footwear business unit, describes his team: “Challenges give us motivation; we are passionate about serving athletes, about our jobs. We custom-make shoes for our athletes, and though our competitors provide the same service for cheaper, our athletes stick with Salomon. We are passionate about helping them improve their performance. Salomon’s values are: integrity, innovation, and a taste for challenge. Being attentive to our customers comes naturally to us since we have passion and are motivated by the idea of improving our products. We start from unsatisfied needs and we innovate from there. We like dreams that are a bit crazy. Salomon’s employees were motivated by the challenge that switching from making skiing equipment to hiking equipment represented. When we were bought out by Adidas, the integration was difficult. We were then bought out by Amer, a financial holding. Financially speaking it was David versus Goliath. However in terms of culture, our corporate culture is so strong, so firmly established and so vibrant that it is very stable. Salomon’s employees have an astonishing ability for recovering and bouncing back, despite going through 3 layouts. We want to help this sport grow; it’s a bit like wanting to change the world.”
- Passion is essential in disruptive innovations Only passion can enable you to change your way of thinking, in order to find or invent new concepts. It is crucial in disruptive innovation. You realize that you can do things that previously seemed impossible. For instance, did Salomon imagine that its profit margins would be multiplied by 2.5 within 5 years? That is the key to disruptive innovation.