Disruptive is one of those innovation terms that gets thrown around all the time. But rarely correctly and it’s rarely the right new product strategy for most companies.
So What is a Disruptive Innovation Strategy?
Disruptive Innovation, a term coined by Clayton Christensen in the Innovator’s Dilemma, simply means creating a new basis for competition that competitors in mature or over-served markets can’t or won’t follow. That’s because the performance is usually poor along traditional lines of competition, making them easy for established competitors to ignore.
For example, competitors in home floor cleaning products used to compete on better cleaning or faster drying. Swiffer beat them with a product that cost far more per use and cleaned far less effectively than wet mopping. How? By competing on ease of use. A dimension that wet mopping couldn’t defend.
Other examples of disruption include:
- Invisalign dental trays replacing traditional orthodontic braces —convenience (removable bite trays and fewer office visits) and discrete appearance (invisible trays) as the basis for competition.
- Digital printing replacing traditional lithography—instant (or nearly instant) printing and short run length as the basis for competition.
Sustaining New Product Strategy
Sustaining innovation is adding additional capabilities and functionality to raise the performance of your existing products. And it is essential for every company to remain competitive. It’s also critical to realize the full potential of both your core technology and markets. An example would be Swiffer moving up the performance curve when it added a wet cleaning solution to the pads.
It’s easy to look down on sustaining innovation, but that’s a mistake. If you have a strong market position and work hard to identify new unmet needs, a sustaining focus can bring real breakthroughs to your core market. Milwaukee Tool is a great example of that with a constant stream of tools to help contractors get more done in less time.
Choosing the Right New Product Innovation Strategy
Here are five simple rules to help you decide which approach best fits your situation:
Rule #1 – If your market is underserved, you should choose a sustaining new product strategy. In fact, sustaining innovation should be at least a part of every company’s strategy. Even if you’re a disruptor, you continually need to increase the capabilities of your new product vs. established competitors. Just like Wet-Jet allowed Swiffer to move closer to wet mopping performance.
Rule #2 – To challenge a dominant competitor in an established market, you need a disruptive technology strategy. Attacking a market leader with a sustaining strategy is a recipe for disaster. They have too much to lose and have the cash flow to defend their position. The way to dislodge a market leader is what P&G did with Swiffer—by finding an underserved segment (people who didn’t have the time to wet mop), launching a disruption, and then steadily moving its performance up the sustaining performance curve.
Rule #3 – If you want to go after a disruptive opportunity, don’t launch it in your existing markets. If you do, your own organization will sabotage you. IBM recognized that Traditional mainframe engineers naturally dismissed PCs as toys. So they set up the PC business as a completely separate company in a different location. That’s also why it took a market outsider, like P&G, to see the potential for the Swiffer.
Rule #4 – Don’t expect your best customers to adopt your disruptive technology. As every generation of digital storage technology came to market it was never the existing users that adopted the newer, smaller platforms. Instead, they wanted read/write speed and storage density per dollar. Instead by competing on size and lower energy usage, they opened up entirely new markets like smartphones and tablets. That’s a big part of why launching a disruption in your own market doesn’t work. Most companies focus on existing customers not future segments.
Rule #5 – If your market is mature or over-served, you may be at risk for disruption. Don’t ignore lower-performing alternatives competing at the edge of your market. With sustaining improvement, they may eventually compete directly and on a basis that you can’t defend. Ken Olsen, the CEO of mainframe manufacturer DEC, dismissed the first PCs. He famously said, “There is no reason for any individual to have a computer in his home.” Within 10 years, PC Maker Compaq bought DEC.
Of course, if your risk for disruption is high and you want to preempt that with your own disruption see Rules #3 and #4.
Free Resources That Can Help
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And if you’re rethinking your new product innovation pipeline governance, maybe it’s time for a demo of AcceleTrak. Software that gives B2B new product teams real-time visibility into the risks and rewards in their innovation pipeline. All without the hassle of spreadsheets and docs so they can focus on what really matters – delivering their new product revenue numbers.
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