Disruptive Innovation to create a market where you are the standard to follow

Innovating businesses : are you 2D, 3D or 4D ?

When thinking of businesses, you have often said to yourself “it’s no wonder that this business is doing this” or “I wasn’t expecting that!”. There is a way to categorize businesses according to their relationship with innovation: 2D/3D/4D, with D meaning dimension. What do these categories mean?

2D businesses are grounded in the present, even glued to it

Prisoners of a strategy that was tremendously successful in the past, they are glued to the present. For instance Microsoft is a 2D business: it let the Internet, Smartphones, and Pads go by. Another example: Carrefour is a 2D business, glued in the present, and arguably even in the past.

3D businesses take the time to look into the future

They grow in size, their ecosystem guarantees their development, but they look into the future with the eyes of the present. Apple is an example of a 3D business. It has an ecosystem that gives it a vision 2-5 years into the future. In the retail sector E. Leclerc and Système U are 3D businesses.

4D businesses keep a foot in the present, but their bodies are in the future.

They add the future dimension to 3D. Google is a 4D business based on a sound 2D basis, an intelligible 3D component and a vision of time – constantly tested 4D. Auchan and the Association Familiale Mulliez are 4D businesses where there is a permanent future-oriented corporate culture. They look to the present with the eyes of the future.

What is the secret of 4D businesses such as Google and Auchan ?

They cultivate curiosity, encourage the use of intuition, and promote tests. They are constantly on the look-out for weak signals, especially their in-depth meanings (as opposed to their surface appearance). They extract from weak signals dynamic scenarios of the future. Put simply, they engage in forecasting…

By Philippe Cahen
Speaker and forecasting consultant.

Disruptive innovation and technological breakthroughs

People often confuse disruptive innovation with technological breakthroughs, and this even though both concepts are completely different. Here is a clarification of both concepts that you should keep in mind:

Technological breakthroughs :

They are new technologies that provide better performances than existing technologies do. They supersede and replace existing technologies. But they do not create a new market. New technologies are in fact usually invented to improve a product or a service in an existing, mature market. That is why they involve incremental innovations and not disruptive innovations.

Disruptive innovation :

Disruptive innovation is an innovation that leads to the creation of a new market. These new markets differ radically from existing markets. Their essence lies in changing the customer’s concepts. They usually provide much better advantages to customers at a much lower cost. They are very often based on existing, tried and tested technologies, despite the appearances.

My advice:

Do not wait for a disruptive innovation to come along to look for new growth drivers. The process of creating new technologies is long and costly. And yet you can boost your business’ growth simply through a disruptive innovation, without needing to invest heavily in R&D. Take my advice: carry out a low-cost disruptive innovation in a niche – this will give you the means to create a new market where you are the standard to follow.

Some examples to illustrate my point :

1.Disruptive innovation without technological breakthroughs:

• The software on which social networks such as Facebook and Twitter are based was not the result of a technological innovation. It was instead the fruit of a conceptual innovation: facilitating the creation and sharing of contents by the users themselves. This disruptive innovation changed our way of living. It started the transition from the Web 1.0 to the Web 2.0 (the interactive web).
  See also: Disruptive innovation, the takeoff of Facebook explained

• The iPhone revolutionized the concept of mobile telecommunication. However the technology that it uses was already around before it was launched. Apple created the iPhone without creating any technological breakthroughs.
• Read about other examples:
  Disruptive innovation: redirect existing technologies
  Sustainable competitive advantages in the agricultural sector are within reach
  The secret to Amazon's success in disruptive innovation

2. From technological innovation to disruptive innovation:

• CCD technology :
  
  CCD technology is applied to components that are used for capturing light signals and turning them into electrical signals. It makes them 10 times more sensitive to light, as compared with standard silver photographic film. Such technology was first used in very powerful telescopes to help them capture the light signals of very distant stars.
  
  The invention of CCD technology was a technological breakthrough since it meant that an entirely new technology was available for capturing light. But it was not in itself a disruptive innovation: it was an incremental innovation in the field of telescopes.
  
  The disruptive innovation happened when CCD technology was used for other purposes: digital photography and ultimately sharing pictures through the Internet, computers and mobile phones. These new activities have revolutionized our way of living. Without CCD technology there would be no pictures on the internet…
• Flash memory :
  
  Flash memory technology is used in memory cards. It has been applied to USB keys (flash drives), digital cameras, cell phones, etc… These new memory cards have partly replaced RAM (Random Access Memory) and regular computer hard drives. It was a disruptive technology because it allowed a significantly better compromise between access speed and price. Flash memory technology was initially used as an incremental innovation: its purpose was to replace the hard drives and memory technology used in computers.
  
  The disruptive innovation happened when flash memory technology was applied to the USB keys that are found in audio players (replacing the original Walkman) and especially in Smartphones (iPhone). The disruptive technology made improved data storage possible. The disruptive innovation made inventing the iPhone, a telephone which revolutionized the way we use telephones, possible…

Benoit Sarazin

A disruptive innovation is at your doorstep !

You have all the capacities that you need to carry out a disruptive innovation, regardless of whether you are a small business or a big corporation. Carrying out a disruptive innovation means:

- Creating a new market
- Becoming the standard on that market and keeping that status throughout its development.

There are many tactics and strategies that help you succeed in this task. However the most important thing is to think outside the box. It is always possible to see things with another angle, especially when everyone is thinking in the same way. For instance:

Imagine that you are in the year 1900. Carriages are drawn by horses. And then somebody comes along and invents the automobile. People then compare automobiles with horse-drawn carriages and draw up a list of pros and cons:
- Automobiles make noise
- They constantly break down
- You constantly need to fill up the automobile’s gas tank
- They require that all roads be paved with a layer of tar
- They need gas stations everywhere
- They go a little faster than horse-drawn carriages do, but that’s about it…

Thinking differently and creating a disruptive innovation involves knowing how to detect opportunities that are real but hidden because they are only just emerging.

Below you will find a couple of extracts from the conference I held at the Global Speakers’ Summit in Amsterdam on 16/04/2011:

[click here if you cannot see the video]

 

[click here if you cannot see the video]

 

Benoit Sarazin

A new paradigm for your disruptive innovation

Disruptive innovation makes revolutionizing a market possible.

You provide customers with significant advantages at a low cost. But it seems like an impossible challenge. And many of my clients ask me: “how do you combine significant advantages and low costs?” Incorporate the new “Pull” paradigm in your business strategy and you will find the answer!

The new « Pull » paradigm

The end of the « Push » world is approaching. It is based on offers made to passive customers (whether these take them up or not). The world we are entering is a world of “Pull”, based on co-creation through frequent interaction with customers.

• Passion :
  The « Pull » world is characterized by the rise of a society of enthusiasts. Consumers seek fulfillment by becoming passionate about what they do. This is applicable to sports, creative activities and professional activities.


• Interactivity :
  Customers have become proactive. The days when they waited around in silence, patiently and passively, for a product to come their way (the days of“Push”) are over. They now go looking for the products and the information they need, be it through their community or through interactive media. Hence the growth of search marketing and social media on the internet.

Incorporate this new paradigm in your disruptive innovation strategy

3 critical ideas that are as many keys to disruptive innovations can be taken from « The Power of Pull », a book published in 2010. You can make advantages for your customers bigger, while keeping costs low, by giving them the means to:

• Access information :
  By stimulating the enthusiast community surrounding your products through community management, you make it easier for customers to access the information they need. Your customers then give each other advice on how to best use your products. This means that you can constantly monitor their needs and adapt your products to their respective markets.


• Discover new ideas :
  Give your customers the opportunity to find the solutions to their problems within the community. They will then find the solutions to problems they have not even experienced yet. They will thank you for this by bringing in new customers. In this way your business will experience astonishing growth rates.


• Achieve incredible exploits :
  Assist your customers in achieving goals that they merely dream of. You can make this happen through the resourcefulness of the community. Your offer becomes therefore much more valuable than those of your competitors, and you end up dominating your market.

This new paradigm, that John Hagel has coined the “Pull” world, is in perfect agreement with the disruptive innovation methodology that I have been advocating for a few years now…

Read also:
Creating and preserving your competitive advantage in the face of much stronger competition

Source : « The Power of Pull » by John Hagel

Benoit Sarazin

Disruptive innovation is actually a low-risk strategy !

"We can't solve problems by using the same kind
of thinking we used when we created them."
Albert Einstein

In a high-risk environment, a disruptive innovation is actually a cautious strategy.

Factors of uncertainty are complex and it is difficult to foresee their development. However successfully carrying out a disruptive innovation is possible, even despite this lack of visibility. Here’s how you innovate while minimizing risks.

Change your perspective on the issue at hand

• Break through the straitjacket:
  Your thinking habits are a stranglehold for innovation. They stop you from imagining other possibilities. We have a tendency to presume that this or that is impossible, especially when we have been experts in a particular domain for several years.


• Widen the range of possibilities :
  You have to think outside the box, beyond your usual way of thinking. This means that you have to question commonplace convictions and beliefs and ask yourself “why not?”. This makes the realm of possibilities bigger. It helps you go beyond the paradigm that stipulates a strict relationship between actions and results.


• Rethink the fundamentals:
  Our usual way of thinking is a dead end. Business models focusing too intensely on incremental innovation often lead to absurd results. For instance in the deodorant sector everybody wants to do better than everybody else, which means making the deodorant’s effects last longer. In the end a deodorant that lasted 72 hours was released ! Who needs a deodorant that lasts 72 hours ? The only way to avoid such absurdities is to engage in the disruptive innovation procedure. This consists in questioning our most fundamental beliefs, as well as the facts that we take for granted.

You don’t need to be a creative genius to successfully carry out a disruptive innovation.

It is often a wise idea to hire an external consultant that is unaffected by the usual way of thinking in your sector.

Designing new products with a small budget

• The trial-and-error principle:
  He who succeeds in his first attempt learns nothing because he cannot know why he succeeded. However he who proceeds through trial and error comes to understand what doesn’t work, and why it doesn’t work. He then comes up with new ideas and carries out new trials. This is a fundamental principle. Trials that do not work are not failures! They are stepping stones.


• Make use of a pretotype :
  The pretotype phase is the step that precedes the prototype phase: it is a simulation that sets the conceptualized objects in motion. By quickening the process it gives you the means to know whether you are on the right track or whether you are heading for a dead end. Those who design web projects use this technique. When the results are good, they know that they can keep searching.


• Draw on existing technologies :
  This allows you to reduce risks. Disruptive innovations do not need huge budgets since existing technologies can perfectly well be reused in the process. Disruptive innovations are mainly business model innovations, not necessarily technological ones. They therefore allow for caution.
  See the following article:
  Disruptive innovation, redirect existing technologies


• Listen to the heavy users of your product :
  They are better at detecting faults and failures than lighter users are. This product improvement process eventually leads to the creation of a new product that responds to needs that were previously unfulfilled. You have then therefore created a new market in which you have a competitive advantage (an advantage for the consumer that your competitors either do not provide or provide less well) that is sustainable.
  See the Salomon case study:
  Salomon's example: 7 pieces of advice for disruptive innovation

These pieces of advice are taken from the conference held on the 6th of April by Olivier Soudieux and me. Olivier Soudieux is a trainer and a speaker at conferences. He provides the world of business with his expertise on demanding environments.

By Benoit Sarazin