This is part of an ongoing series based on the highly rated book Selling Innovation, a guide to structuring a complete start-up revenue capture process. The book is based on a day-long workshop held at the MIT Enterprise Forum in partnership with Microsoft. Sections of each chapter will be shared here on The Startup Growth Blog. Download the complete eBook, blog readers get a special 25% discount with code JA49Y.
Disruptive vs Incremental Innovation
Truly disruptive innovations do not occur often. For among other reasons, there are only so many adopters in any given market willing to continually try radically new products and services. Disruptive Innovations can only target the much smaller early adopter segment of the population, and it requires its users to accommodate the new information or way of doing things into their daily lives. But while re-shaping the dynamics of a marketplace may seem attractive, many a fortune has been built on incremental innovation.
Incremental innovation is an add-on, value-adder, or after-market creation that has clear application as part of an existing innovation or platform. It is often easier to sell because adopters need only assimilate a marginally new framework of thinking or doing to find value from the innovation.
There is another key aspect to ‘disruptive innovation’ that all innovators need to keep in mind when the spark of innovation is forming in your mind. While an innovation may be disruptive to a particular market or industry, the term disruptive is not a value proposition to most people’s ears. Never before has a user thought their life is too easy and what they really need is to have their safe, familiar patterns of behavior disrupted.
Remember your elementary school days when one kid in the class got sent to the principal’s office because s/he was being ‘disruptive’? Disruptive is not always good. In the example from Harvard Business School professor Clayton Christensen’s the Innovator’s Dilemma, the mini-mills in the steel industry generated great wealth and opportunity for those people who had a vested interest in them. But there were thousands who worked and gained from traditional mills who were thrown out of job, lost value in their stock portfolio, or otherwise did not benefit from the disruption in the marketplace. This is not to say that it should not have happened or that innovation is a bad thing. Rather, especially when selling an innovation into a mature market place, what you are selling may threaten someone else’s job, a way of doing business, or even an entire company. Resistance to buying may have little or nothing to do with your innovation.
Disruptive innovations are also often first to market, but first-mover status seldom translates into sustained sales advantage. Few first movers have been able to capture and sustain market share, even ones that were able to scale. Google was not the first search engine. Facebook was not the first social networking site. The iPod was not the first hand-held audio player. Each evolved from prior iterations of a comparable, but perhaps less sophisticated or less well sold, innovation.
Innovation goes in waves. As markets mature and successful sellers establish dominant position there are myriad opportunities for disruption – a better way of doing business, a faster tool, a bigger device. These moments used to occur only every decade or two. Over the past few decades the cycle has shortened to five or seven years. And technology now allows innovators to bring solutions to market faster, cheaper, and to a larger audience than ever before. But if the goal is to become a successful innovator and not a clever inventor, it may be best to wait until the market has told the innovation community exactly which disruptions its willing to live with, much less buy.
As the waves of disruption evolve, innovators can monitor prior efforts to see how certain products with definable features were adopted by customers, and make refinements to better address a now clearer market need. Eventually, an innovation is layered on top of an existing way of doing business, and integration points emerge among once disparate innovations, which enable new ways of doing things that were once not possible. Social networks, for example, were once an innovation separate from smart phones, and innovations in each market attracted interest from early adopters and venture capital. Now, more pictures are taken using the iPhone and posted to Facebook than using any other photographic device.
Scale is also reached at this point of convergence creating larger commercial opportunities. Incremental innovation becomes easier to identify, quantify, and sell because data exists and can be analyzed to determine the most cost effective path to market, ideal delivery mechanisms, customer service requirements, feature sets, and even price. Remember, innovation is not invention, and as the old saying goes, ‘pioneers die with arrows in their backs, farmers die rich’. Being a ‘fast follower’ rather than a disruptor may not be seen as exciting, but it’s a much more reliable path to success paved by giants of commerce.
Is it innovative to be a fast-follower? Ask Bill Gates, Steve Jobs, or Mark Zuckerberg. Can incremental innovation lead to success? Consider Dell or Tesla Motors, were they the first with their innovation?