Disruptive Innovation
Clayton M. Christensen is an American economist. He coined the term disruptive innovation in 1995. He defined it in a paper for the Harvard Business School. Disruptive innovation means transforming the product or a solution in a way, so everyone can access it. The solution and product, most of the time low price and accessible to a larger population that opens a completely new market and also provides the high market solution simply and cheaply. They gain market share because of their low cost and other advantages, but their sophisticated competitors suffer due to the low cost. They enter a low market that’s why large companies are not bothered by them. It cannot be done overnight, but it can take time.
Examples
Some examples of disruptive innovation are steel mini-mills, retail medical clinics, personal computers, smartphones, radios, video streaming, and photography. Online education in the future is maybe one of the disruptive innovations. Online courses cannot compare with the real class, but it is t improving the quality day by day.
In the 20th century, mini-mills changed the steel industry. The steel companies produced sheet steel and a vast range of other steel qualities. They also make the thicker structural steel that is used to make the cars which they sold at a higher price. Then Mini mills, a small company, found a solution to melt down scrap metal recycled from cars and manufacturing waste, which was up to 20% cheaper than what the integrated mills were spending. But the metal product was not high quality, it is only suitable for rebar but not cars. The integrated steel does not care about that when mini-mills produce the rebar. In 1979 mini-mills drove integrated steel out of the rebar market.
Mini mills focus on how to make high-quality metal and raise their profit. They produced the slightly high-quality metal one after another. This pattern continued until mini mills had taken over. Christenson writes, “It took more than 40 years before the mini mill Nucor matched the revenue of the largest integrated steelmakers.” They take one step at a time until they reach the top.
Transistor radios first enter the low-end market. In the 1950s most people owned the radio consoles that were manufactured by RCA and Zenith. These are expensive and inefficient. Then Sony’s Transistor radio entered the market. Teenagers like them because they can hear music whenever they want. They are cheap, portable, small and the sound quality is good. But at that time these companies were not bothered. But with time they improved, and they gained fame. They transform the way the world consumes music and radio for other personal music players. The companies like RCA and Zenith, however, had already been well behind.
Incremental Innovation
Incremental innovations mean improving the products and services of a company. “You are trying to improve the product in some way.” It is the most common type of innovation because of its low risk. At some point, this innovation is used by companies in their business life. They prefer to remain relevant without causing an industry-wide stir. “If you just keep the products you have right now, you could be gone in two or three years because someone else has come up with something interesting and taken all of your customers away,” Barczak says. So a company must enhance its services and products to keep the consumer interested in its products. The company needs a smaller amount of money to upgrade its products.
Examples
iPhone, Gillette, and Coca-Cola, are some examples of incremental innovation.
Gillette is the American brand of safety razors and other personal care products developed. To stay in a business that improved its products. It is among those companies that used incremental innovation. Gillette’s razors are with one blade at first, but they evolved over the years. Now they have multiple razors and varying features to fit their market.
Apple is one of the known companies in the world. The iPhone’s basic design remains the same. They slightly upgrade the version and other features like a camera, and graphics that build on the current model. They did not entirely release a new type of phone until now.
Architectural Innovation
Architectural innovation means the use of existing products, skills, learning, and applying to a new market. It also includes the low risk because it can be proven already. The term refers to the process of redesigning the product. The key is the core components cannot be changed and remain the same. The core of architectural innovation is a reconfiguration of existing, established components that connects and links the components in a new way.
Examples
NASA’s Ames Research Center improved the protection of aircraft cushions in 1966. They create a new foam that can respond to the force when applied to it and then go back to its original foam. This is used in sports equipment and medical equipment table pads. It is also known as “Slow spring back foam” and memory under architectural innovation.
Another example is the ultra-thick concrete building that BRUIL introduced based on a new extra strong formula of concrete. As an example of architectural innovation, Henderson & Clark used a ceiling fan. If the fan is reconfigured, but with the same core components, to become a portable fan, then it is an architectural innovation.
Radical Innovation
Radical innovation is the opposite of incremental innovation. They create an entirely new market for their products. But it involves high risk. “Radical innovations are high risk, high return,” Barczak says. Radical innovations are rare. When we think about innovation it is the first type of innovation that comes to our mind. It gives the people what they need by solving their problems, and maybe they didn’t even know they needed them. It changes the complete chapter of the economy. New ways of doing business require new technical skills and organizational capabilities by firms to succeed in this direction, and they require a completely new set of competencies for businesses that pursue them. “People want new things, but they don’t necessarily want to learn new things,” she says.
It’s harder sometimes for radical innovations to get accepted because they are so different.
Examples
Air conditioning is a radical innovation, in some countries, temperatures are high hence the need for a cooler. The Internet, Photocopiers, and Electricity are also changing the way of living of people. Apple, John Deere, and Netflix are the most prominent recent radical innovation companies. The Internet makes radical changes in the methods of communication.
Netflix entered the entertainment industry in 1997. At that time Blockbuster was an established company and the main competitor of Netflix. Blockbuster did not see Netflix as a threat and did nothing. Netflix drove out the blockbuster in the entertainment industry.
John Deere’s one of the largest farmer’s equipment industry manufacturers. They change the agriculture industry through their creation. Despite this, John Deere was the first company in the industry to recognize the value of big data to the business. Customers who bought John Deere equipment were able to connect their equipment with multiple software packages, later merged into the open myJohnDeere.com platform.
Conclusion
There is no good or bad innovation. All the innovations mentioned above if applied in the right conditions then it is effective for your business. You just need the knowledge and know when to apply which type of innovation. All the innovations are affected when implemented correctly. Many of the theories have failed due to the wrong source of information. Research the methods that work well for your business.
Thanks for reading.