“Disrupt, or get disrupted,” John Chambers, executive chairman and former CEO of Cisco, said during his conversation with CNBC’s Tyler Mathisen.
While innovation is key to success in the digital era, It is being made to believe that innovation is only possible if you change your business is some radical way-”disrupt yourself”. Unfortunately the results are not so encouraging. As per McKinsey research, 94% C level executive are not happy with their innovation effort. 60–70% of disruptive ideas fails. Are there other models of innovation?
Why disruptive innovation fails for few?
Disruptive innovation approach is most of the time justified, explained and judged through the lens of examples like uber, airbnb, netflix and amazon etc. These examples while highlights the success, cannot be straight away imitated by Industry incumbents as they are not starting from zero. Most of the disruptive programs requires considerable realignment of process, people and systems. The consequences and impact of a disruptive changes is generally unknown adding severe amount of unpredictability to the business.
Imagine a situation where the entire company is radically changed but fails to impress the customers. Does the brand stands a chance to recover?Innovation is a journey and not a destination! Shouldn’t the framework allow organisations to try, if fail then recover?
Lego in 2003 had almost gone bankrupt because they picked up the disruptive approach to face the competition and revive sales. They developed too many different products very different from their core business in the name of disruptive ideas. Lego was put back on track when they went back to focus on the core and started augmenting and completing the key products.
When Ron Johnson became the CEO of J.C. Penney in 2011 ,his team decided to implement extremely bold and disruptive ideas. they eliminated coupons and clearance racks, filled stores with branded boutiques, and eliminated cashiers, cash registers, and checkout counters. Yet just 17 months sales had plunged, losses had soared, and Johnson had lost his job.
Is there any alternative to big, disruptive and radical approach for innovation that is risk free and affordable?
In order to think for an alternative, we need to first discern “disruption” from innovation. The commonly accepted definition of innovation is about creating values by meeting unfullfilled needs or serving the customer better through new products or services. It is interesting to note that no where in the definition there is a mandatory dependency on disruption and yet as a panic reaction most of the the brands try to desperately think of a disruptive idea when faced with competition.
Lego successful turnaround throws light on the “other” model where innovation effort when shifted from disrupting the core product to innovate around the core product, helped them bounce back.
In his book David C. Robertson, Professor at the Wharton School calls this as the third way of innovation where in place of disrupting the core, one strives to get better at serving customer needs by innovating around the core product or shall we say complimentary innovation.
The desire to get better at fulfilling customer needs in turn help shifts the focus from how “new” or disruptive to ‘how’ good is the idea. The shift invites a wider range of ideas: taking existing products, services, technologies to a new market or to a new group of customers. Given that there are always a plethora of a good ideas, it forces the culture of experimentation to select the best in terms of effectiveness and impact. You are no longer talking about “the” one idea but a portfolio of good ideas. Conducting experiments along with proving the idea value also ensures that the organisation survival is not threatened even if few idea fails.
One of the strong point of complimentary innovation is the close examination of customer journey and the associated context. This brings the customer back to the centre. One of big reasons for disruptive innovations failure is lack of customer focus. The customer journey typically touches different functions like legal, finance and customer supports etc and they too are challenged to rally around to support the complimentary innovation. Most of the time these functions are out of innovation purview.
Every organisation is different, Innovation for one may not be that cutting edge for other or an old thing for someone else. Complimentary innovation helps the organisation to discover their strength, focus area and align their innovation strategy to organisation purpose.
While i used the world “alternative” to describe complimentary innovation, i don’t intend to mean that complimentary innovation is mutually exclusive to disruptive approach. Few situations demands complete disruption. Pager had to die with the mobile arrival. Typewriter had to die with the mobile phone arrival. No complimentary innovation could have saved it.
There are many paths of innovation and not just the headline grabbing disruptive idea. Any innovation strategy focused only on radical ideas is not always sustainable in the longer run. So next time when asked to think out of the box, do think around the box as well.