So much has been written about
disruptive innovation that the word disruption itself has become
a catch phrase for just about every type of innovation that
changes anything. It is important that companies be precise in
their description of what type of innovation initiative they are
trying to pursue so the appropriate strategy can be followed.
Generally speaking, there are 3 different types of innovation:
(1) product and service innovation – which is focused on
improving a product or service, (2) operational innovation –
which is focused on making an internal business process a core
strength, such as Toyota did with the automotive production
process, and (3) business model innovation – which is focused on
creating a new formula for making money. Google, for example,
has reinvented the way a company makes money with advertising on
the web.
Although a company can be impacted – even to the point of its
demise, by a competitor that employs a strategy of operational
and business model innovation – like Wal Mart has done in the
retail industry – this type of innovation is not generally
referred to as a disruptive innovation – there is no disruptive
technology involved per se – the impact is made with improved
business processes and a new business model.
The way I see it, disruptive innovation is a type of product or
service innovation. Please let me explain. When it comes to
product and service innovation, there are 4 growth paths: (1)
core market growth – which is making improvements to products
and services that already exist in order to help customers get a
job done better, (2) adjacent or related market growth – which
is improving existing products and services to help customers
get related or ancillary jobs done – like adding a tongue
cleaner to a tooth brush, for example, (3) new market creation –
which is creating a new product or service for customers who are
trying to get a job done but cannot because no or only ad hoc
solutions exist, and (4) disruption, which is specifically
defined as creating a technology that enables a new set of
customers to perform a job that only specialists could
previously perform. Crest WhiteStripes, for example, made it
possible for people to whiten their teeth on their own,
eliminating the specialist – the dentist.
Using the right categorization scheme to think about different
types of innovation is helpful in defining an effective
innovation strategy. What companies must keep in mind is that
not everything is disruptive innovation – that classification is
to broad. Using the job as the unit of analysis, we say that
companies can innovate by helping customers get a job done
better, by helping them get related jobs done, by helping them
get new jobs done where no product currently exists and by
helping a new set of customers perform a job that was previously
performed by other, more skilled people.
Our outcome-driven methodology operationalizes these theories of
innovation – including those regarding disruption and blue ocean
strategy – making it possible for companies to use science and
discipline to innovate along multiple dimensions.
