Core belief: *"Innovation is not distributed equally within an organization."* All organizations start their [[Innovation]] journeys from different maturity levels - not only as an organization, but also within segments of that organization. Some parts of an organization might be already very innovative, others might not be. There are organizations that use cutting edge production lines while their back office still runs Windows 7. That also means one needs to be mindful about how individuals and (parts of) organizations feel about and manage innovation. ## Impact (Market) The term "disruptive innovation" was first used in the modern context by Clayton Christensen, describing that under certain circumstances a market becomes over-served by incumbents, at which point the basis of competition changes and firms become vulnerable to a new type of competitor. These new companies offer products that are not comparable to existing incumbent ones, and are initially seen as inferior and less profitable. It therefore is not direct competition, but something else that however eventually fills the same place as the incumbents. As the disruptive element improves, it captures more of the market, with incumbents eventually having no place to retreat to. Implications: + A Disruptive Innovation represents a fundamental shift in value that requires a change in the way business is done + There is no profitable market for disruptive innovation, until there is + If there was a current market for the “Next Big Thing,” it would actually be the “Current Big Thing” + That means that disruptive innovations are difficult for established companies to pursue because there is no money in them See: https://digitaltonto.com/2009/what-is-disruptive-innovation/ ## Impact (Audience) Every organization tries to be radically innovative or disruptive while financing the R&D effort with incremental innovation. They take what works right now to fund their future. The more disruptive the innovation, the higher the potential return as competitors will need more time to catch up. However the more radical or disruptive the innovation, the more risk it carries that there is no return at all. However at some point there will be diminishing returns & obstacles for each type of innovation: * **Incremental innovation**: This eventually stops as something gets harder and harder to add onto. * **Radical innovation**: This usually requires organizational change. * **Disruptive innovation**: This typically requires society scale change. As you get to the radical & disruptive innovation, the potential upside (market / benefit) needs to be big enough and ideally there is limited competition that also wants to exploit the same innovation. That said, remember that *innovation is not distributed equally within an organization*, so every actor has their own threshold when things become radical or disruptive for them. This is true for organizations as a whole as well as individuals within these organizations. It is an important aspect of [[Innovation Management]] to understand these boundaries for all actors in a defined system and make recommendations. ## Innovation categories (organizations) -> *This is based on the innovation management course at Berlin university, Futures Studies* For each part of an organization, innovation - or "newness" - can be categorized as follows: * **Incremental innovation**: A direct improvement of something the organization is already doing. This innovation can usually be achieved from within the organization with its current capabilities. * **Radical innovation**: A major improvement of something the organization is already doing, introducing new capabilities into the organization as a result. This can usually be achieved from within the organization by upskilling, in some cases with outside help. * **Disruptive innovation**: A functional, significantly better substitute, based on completely new, non-transferable abilities. This usually introduces massive change in the organization. These are similar to the horizons in a [[Multi Horizon Framework]]. There is an even more granular model here: [15 Types of innovation](https://thegentleartofsmartstealing.wordpress.com/types-of-innovation/#:~:text=15%20Types%20of%20innovation%201%20Incremental%20innovation.%202,Open%20source%20innovation%20%2F%20Crowdsourcing.%20More%20items...%20). ### Examples * Microprocessor manufacturing sees incremental innovation with each generation to reduce die size, node size and thus increase performance and so on. A radical innovation might be the integration of co-processors or FinFET transistors into your design, which requires new types of knowledge, but still relatable to what you did before. A disruptive innovation would be quantum computing, which besides the aspired outcome of computing information has nothing to do with microprocessors per se. * Another example would be [[Autonomous Vehicles]]. One example of this is autonomous cars, which seems intuitively disruptive. While the technology to enable true autonomous driving contains a lot of hard problems and unknowns, _looking only at car manufacturers_, the actual result might be somewhere between incremental and radical innovation. The car industry is heavily supplier and supply chain based, where they usually buy in such technologies to be used integrated in their vehicles, as proven by decades of integrating progressively complex driver assistants that represent L2 and L3 autonomy. From the _perspective of city planning_, autonomous driving will not create a substitute for cars as a mode of transportation, it’s an evolution of a concept with transferrable approaches and infrastructure. Innovating public transportation to fully replace cars for example would be way more disruptive to both these perspectives since this would make “car knowledge” obsolete and require new city infrastructures. But from the *perspective of drivers*, autonomous cars are obviously a disruptive change, as it makes all their previous experience in operating such a vehicle obsolete and they have to re-learn an entirely different operating paradigm. ## Innovation categories (audiences) -> *This is based on the innovation management course at Berlin university, Futures Studies* For each part of an audience or society, innovation - or "newness" - can be categorized as follows: * **Incremental innovation**: A direct improvement of something the audience is already used to, with immediate ability to adopt. * **Radical innovation**: A major change of something the audience already knows, introducing new approaches or capabilities. This is associated with a learning curve, building on previous knowledge of the thing. * **Disruptive innovation**: A functional, significant change of something, based on completely new, non-transferable skills. The audience is required to completely re-acquire skills. Examples: * The telephone itself was a disruptive innovation that changed the behavior on society scale by allowing long-distance communication. The change from dialing to touch dial was an incremental change. The introduction of the mobile phones was a radical innovation as knowledge could be transferred. ## Articles & posts http://reactionwheel.net/2016/05/disruption-is-not-a-strategy.html https://blog.intercom.com/what-everyone-needs-to-know-about-disruption/