Disruptive innovation requires a new way of thinking. It requires the courage to do things differently, to break molds, to move in directions nobody has considered before. That’s how we create real progress, not just improvement.
But what, exactly, do we mean by disruptive innovation?
The term was defined by the American scholar, educator, author and Harvard Business School professor Clayton M. Christensen in 1995 as:
“A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leaders and alliances.”
Other definitions include significant societal impact as an aspect of disruptive innovation.
In business, the term refers to a new offering, business model, or value proposition; one that takes on the dominant, incumbent leader in the market; one that has the potential to lead to its destruction.
The Fourth Industrial Revolution
According to a recently released paper titled The Fourth Industrial Revolution (from the World Economic Forum), big disruptions are heading our way.
“We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before. We do not yet know just how it will unfold, but one thing is clear: the response to it must be integrated and comprehensive, involving all stakeholders of the global community, from the public and private sectors to academia and civil society.”
“There are three reasons why today’s transformations represent not merely a prolongation of the Third Industrial Revolution but rather the arrival of a Fourth and distinct one: velocity, scope, and systems impact. The speed of current breakthroughs has no historical precedent. When compared with previous industrial revolutions, the Fourth is evolving at an exponential rather than a linear pace. Moreover, it is disrupting almost every industry in every country. And the breadth and depth of these changes herald the transformation of entire systems of production, management, and governance.”
Disruption has already become a driving factor in the rise of new start-ups, products and services with the potential to change the industrial landscape as we know it.
The Winning Formula: Innovative Thinking Meets Technology Meets Design
Breaking the status quo—an established pattern, a routine—is what opens new doors. When we look at the big success stories of this century, then we can see a pattern. PayPal, Tesla, Airbnb: They each have become successful by entering established markets (banking, automobiles, hospitality) from the sidelines or from the bottom up. Armed with new technology and innovative thinking, they turned the markets they disrupted upside down. They went straight to disruptive innovation—bypassing innovation and improving upon an existing product—to developing new products that created new markets.
Innovation is the skilled engineer in a German car. Disruption is the creative renegade with a Harley and bad-ass tattoos.
But it doesn’t stop there. With technology at its core, we see virtually every aspect of our lives disrupted: Digital currencies, the cloud, 3D printing, wearables, film making, ebooks, publishing, research, e-commerce, wireless broadband, social networks, augmented reality, big data analytics, natural language processing, cognitive computing, drones, robots, self-driving cars, crowd sourcing, smart cities, the Internet of Everything…
Each one, by itself, is likely to have a substantial impact on the fabric of our society. In combination, they can create an environment that is dramatically different and far more volatile than the world that came before—an environment filled with novel challenges but with great opportunities also.
Navigating Disruption: The Big Shift
Disruption typically involves a challenge to the seemingly entrenched success of an incumbent. A report by the Aspen Institute, titled Navigating Continual Disruption calls it The Big Shift:
…[disruptive innovation] can play out along two different dimensions — the scale of operations or ways of connecting with others.
Disrupting the scale of operations
Two diametrically opposed forms of disruption are playing out along this dimension, one that is driving toward greater fragmentation of operations and a second that supports increased concentration.
- Increasing fragmentation—In significant parts of the economy, smaller economic entities are becoming more viable and are taking increasing share of markets from large, established firms. Empowered by the erosion of the scale economics that have protected incumbents, start-ups and small entrants will increasingly disrupt the leadership positions of large firms.
- Increasing concentration—At the same time that increasing fragmentation is playing out in certain parts of the economy, increasing concentration is playing out in other parts. In many cases, concentration is not being driven by incumbent leaders but by “edge” participants who understand where and how scale economics are evolving to enable greater value creation.
Disrupting ways of connecting with others
Disruption can happen not just by aggregating resources. It can also be based mobilizing and coordinating resources, including human resources, in new ways that increase value for all participants. This is a direct reversal of the trend over the past several decades by which large, established companies intentionally reduced the number of relationships they maintained with suppliers and distribution channels in order to improve their efficiency. We are now seeing innovative approaches that help participants dramatically expand the scope and substance of their relationships with others, opening up <ahref=”http: globalcompact15.org=”” report=”” findings-level-1=”” 7-new-forms-of-collaboration-between-business”=””>new forms of collaboration and putting those who continue to adhere to the narrower practices of the past at an increasing disadvantage.
Raising The Bar
We’re on the verge of a creative revolution. It’s an exciting time, a time for technical innovation, creativity and philosophy to join forces.
In our experience as a branding and design firm (Marc Posch Design), and having developed hundreds of brands, a few patterns have emerged. There are various opportunities for change, from basic improvement and innovation to full on market disruption. Improvement happens by applying a fresh look, a bold claim or a new packaging. And it goes all the way to the macro level, where design, engineering, manufacturing and marketing are growing into something more organic, and entire industries—if not societies—are being transformed: That’s what we call disruptive innovation, that’s when we raise the bar from surviving to aspiring: from demonstrating technical details, facts, ingredients, to presenting values in a context consumers can and want to identity with.
Rattle The Cage
Through the evolution of the global economy, traditional markets have been transformed into an everything goes mixed martial arts fighting cage. And it’s a brutal fight. For the attacker entering the cage the question is how to find new tools and strategies to win the fight.
Disruption by design is the model that creates opportunities for change and allows innovations to thrive. In saturated markets, it’s the only way for newcomers to compete with the incumbent. Innovation alone does not win the fight anymore.
This is where we are on the side of entrepreneurs who want to enter the ring. With design thinking that helps to define the process, and with design strategy which creates not just the product through product development and branding, but also the marketing process that rattles the cage.
Designing Disruptive Innovation and Creating Success
The challenge and opportunities for creative professionals today is to be at the same table with the development team. Hiring a brand designer should not be an afterthought, the element that creates the logo, or a nice shiny package.
Branding has always been defined as how a brand behaves inside—and outside—its organization. And how it is perceived not only rationally, but also, deep down on an emotional level. Brand building in the age of disruptive innovation goes further: It creates a comprehensive and holistic brand experience offering change as one of the driving factors, selling ‘think different’ as a label that turns products into premium brands people wait in line for hours.
The new paradigm is strategic branding as the brain, and marketing as the executive, driving organizational change and growth through disruptive innovation.
When done correctly, it’s a powerful, galvanizing and transformational process that defies structure and elevates the creative team to an inspiring leadership role that sets the course for measurable business gains.
What are you waiting for? Let’s create some innovative disruption.