Disruptive Innovation

Last week I traveled to participate in a series of design sessions with a .NET development studio that is building the next generation of our flagship product's website.  Over lunch one day we got into a spirited discussion regarding innovation and more specifically what it means to have innovation that is in fact disruptive.

Wikipedia defines disruptive innovation as follows:

A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in the new market and later by lowering prices in the existing market.

Out of our discussions we came to the conclusion that it was not enough to be innovative - the innovation must also be disruptive which is a fascinating concept.  Also, in some cases a company might be responsible for what might be considered market disruption with the release of a technology that itself wasn't truly innovative.  For example, was the iPod truly a disruptive innovation by Apple?  Immediately we dismissed it as innovative product knowing there were obviously other digital media players the preceded it.  And yet, Apple and Jobs somehow took an already existing technology, and successfully transformed it into a product that appealed to the masses.

Having thought about it quite a bit, I think there are three components that contribute to a disruptive innovation in the market:

1. Being able to Envision the Disruption - One must first have the vision to be able to see how technology could enable an innovation that can be transformative and unexpected (i.e., that is disruptive).
2. Turning the Vision into a Product - Ability to design and implement a solution that satisfies the vision and results in a product that has the potential to be disruptive within the marketplace.
3. Selling the Product - And finally having business acumen to effectively market and inject the product into marketplace with widespread consumer adoption.

Very rarely do companies manage to pull off all three aspects allowing them to innovate disruptively.  Let's put this in the perspective of an example.  Many years ago people dropped their home telephone lines in favor of their cell phone - this I would say was a market disruption caused by mass adoption of the cell phone.  Let's say in the next 5 years I have a vision that with the coming prevalence of open WiFi networks coupled with carrier infrastructure build outs and market competition will produce lower data plans and lead to consumers ditching their cell phone and instead rely on a service (e.g., such as Skype) carrying with them a "smart device" that they use for placing and receiving phone calls.

Ok, I now have a vision for how disruption could be achieved by consumers employing a technology such that they no longer have to pay for both a cellular and data plan.  What next?  Even today I know I could go out and get a WiFi hotspot, set-up a tablet or other smaller device, and use a client such as Skype to provide the ability to place and receive phone calls.  This approach would let me drop my cellular plan and rely solely on my Skype service and hotspot.

Yet is this approach the right answer?  Data plans certainly are not conducive to the bandwidth requirements for extended phone calls.  Moreover, I'm not sure Skype is by itself is a service that could be a complete replacement of my cell phone (e.g., always having it on and it's effect on battery, how easy is it to receive and place calls, etc.).  And let's say for me it would be possible - would it be something consumers would widely accept over their existing cell phones?  The answer of course is no, so if not Skype, then what technology or solution would work better?  Can I take my vision and come up with a product that would allow the consumers to forgo their cell phones in the same way that they dropped their land lines?

And of course the last factor is being able to sell and market the product once produced.  Some might argue that just having a disruptively innovative product alone will cure all.  Timing of course plays an important role (ask Microsoft about innovating the tablet or Palm about touch based device you can hold in your hand) but there also is an aspect of having not only a skilled marketing and sales staff that can get the product into the hands of consumers.  I would say in addition a company's leadership must be willing to take risks on a disruptive technology.  In fact, I remember being ridiculed at a start-up in early 2000 floating an idea for a service that would allow you to stream your home cable feed over the Internet - not enough bandwidth I was told - the idea would never work.

Interestingly enough many start-up websites I've read recently speak about their company being willing to take risks on innovation.  This of course is a luxury that start-ups have and larger companies one could argue do not.  That leads me to close with an interesting twist our conversation last week took when we started talking about larger companies and whether they can innovate in the same way.  Certainly they are not able to swing for the fences as easily as a start-up and yet Microsoft with Windows8 is a recent example where a larger company has staked quite a bit on technology that could certainly cause disruption in the market.

An example on the other side might be Google's Project Glass which personally I think could have the same type of disruption but hasn't as of yet hit the market in a commercially available state.  Maybe the product was shown too early in it's development cycle or perhaps Google is electing to keep it mostly as a pilot and a higher price point believing the timing is not right for a more general release.  It is easy enough to believe that there are in fact examples in larger companies where disruptive technology remain buried in a lab somewhere never to be seen by the general public - it certainly makes one wonder what innovative technology we have missed out on?