Innovator's Guide to Growth: Virtual Book Tour
As part of the Post2Post Virtual Book Tour, we have an interview with Scott Anthony, President of Innosight, an innovation consultancy, and co-author of the Innovator's Guide to Growth. Enjoy!
1. Can you explain how disruptive innovation differs from radical innovation and incremental innovation, which are both sustaining?
Generally, sustaining innovations are about playing today's innovation game better. Incremental innovations involve playing the game a little better, radical innovations involve playing the game a lot better. Disruptive innovations are about changing the innovation game. Instead of competing on the basis of raw functionality, disruptors compete on simplicity, affordability, and accessibility.
The video game industry offers a clear example of this distinction. Sony and Microsoft are largely following sustaining strategies that appeal to fast-fingered teenage boys who want the most realistic game play imaginable. Nintendo is consciously trying to expand the market with its easy-to-use DS Lite and Wii products.
2. There are many well-known examples of incumbents being disrupted: Eastman Kodak and digital photography; full-service airlines and the no-frills carriers, full-service stockbrokers and the low-fee, low-service online brokers to name a few. Can you give examples where incumbents have successfully fended off disruptive innovators by disrupting their own business?
In the list you rattled off there is at least one incumbent success story: Charles Schwab. Schwab introduced its discount brokerage model in the 1970s, then created a separate online offering in the 1990s, which today constitutes a significant portion of its core business. Hewlett-Packard also successfully managed a disruption in its core printing business when it introduced inkjet printers, which were disruptive to laser jet printers. A third example comes from Dow Corning. Earlier this decade Dow Corning introduced Xiameter, a low-cost distribution channel that has allowed it to prosper in the commodity tiers of the silicone market.
Generally speaking, disrupting your own business is quite a tough proposition. We recommend that companies start by thinking about what other businesses they could disrupt. For example, Procter & Gamble has created about a $3 billion fine fragrance business by bringing its disciplined approach to brand management to "democratize" a high-end, fragmented market.
3. You are proponents of segmentation using a "jobs-to-be-done" approach. In "The Innovator's Guide to Growth" you describe a case where new car tires did the job of improving the acoustical environment in the car rather than solving the problem of a flat tire. Can you share other examples of products being used to do jobs that aren't immediately obvious?
Almost any product has non-obvious competition that becomes clear once you use the jobs-to-be-done lens. Take Baby Einstein, a line of videos produced by Disney. The relatively simple, 30-minute videos feature stimulating visuals backed by a classical music score. The entrepreneur who created the product capitalized on the so-called "Mozart effect" that suggests that listening to classical music boosts a child's mental development. Why do people hire Baby Einstein videos? You might say education, and that's part of the answer. But in reality, Baby Einstein is a guilt-free babysitter. The television itself is a great babysitter, but parents who use it are racked with guilt. Baby Einstein lets parents get 30 minutes of peace, without the guilt.
4. It could be argued that in 2008 the theory of disruptive innovation is well developed. If this is so, why do we continue to see so many incumbent firms ignoring the lessons provided in the disruptive innovation suite of books, including "The Innovator's Guide to Growth?"
This is a great question. I think there are two reasons. The first is that even though you know in the long-term disruption might get you, in the short term you can stick to "business as usual" without any pain. It's the same reason people don't exercise, or fail to routinely take preventative medication. Of course, the truth is signs of future trouble are almost always obvious if you look at business the right way, but it is too easy to ignore those signs.
The second reason is there still aren't sufficient examples of large companies that have "broken the back" of disruptive innovation. As that changes over the next few years, and as Boards of Directors increasingly recognize that the roots of long-term malaise are recognizable early, I suspect many more companies will seek to develop a competency in disruptive innovation.
5. As a small business owner, I have found some of the lessons and tips in "The Innovator's Guide to Growth" to be quite inspirational. It appears that if staff working for an incumbent describe my product offering as a "toy" or "crumby" relative to the incumbent's offering, I may be onto a good thing! What other lessons does the "The Innovator's Guide to Growth" have for the owners of small businesses?
Thanks! Innosight itself is a small (but growing!) business, and we follow the lessons in the book in our day-to-day work. We seek to understand the real job current and potential customers are trying to get done. We try to understand where we can be "good enough" compared to competitors, and where we have to be much better. Whenever we have a new idea, we try to find quick, simple ways to test it. And we always watch out to make sure we don't get trapped in our own paradigm by routinely bringing outside perspectives into the business. I think any small business owner can benefit from the discipline of trying to understand the true nature of market opportunity, to develop different ways to seize that opportunity, and to act in ways that allow you to prudently manage innovation efforts.
6."The Innovator's Guide to Growth" suggests that business schools need to be aware that they, too, are not immune from disruption. Are you seeing any evidence of this in 2008?
It is interesting. There are many more options for people to seek on-the-job training or develop particular skills in low-cost ways. Further improvements in technology and the spread of Internet-based video will only create more ways for people to learn without going to centralized, expensive programs for two years. Yet, applications to many top business schools surged in 2008 as the economy sagged. It will be interesting to watch what happens when the economy improves, because I suspect the conditions will be in place for many business schools to start feeling real pain. The schools that are most immune from that pain are those that provide difficult-to-replicate value, such as access to a network of graduates, or personal branding. Those that don't ...
7. In what industries do you expect to see more disruptive innovation in future?
In every industry! Seriously, we think that we've just seen the beginning of disruptive developments in the health care industry. Clayton Christensen has a book coming out in a few months on just this topic. I think other service-based industries, like education, consulting, and legal services are going to see some real changes brought along by disruption. Of course, energy-related industries have never been more ripe for disruption. Finally, I think the travel industry is going to see true transformation over the next decade with the rise of high-quality videoconferencing and convenient point-to-point air taxis.
Thanks Scott for sharing those insights.
1. Can you explain how disruptive innovation differs from radical innovation and incremental innovation, which are both sustaining?
Generally, sustaining innovations are about playing today's innovation game better. Incremental innovations involve playing the game a little better, radical innovations involve playing the game a lot better. Disruptive innovations are about changing the innovation game. Instead of competing on the basis of raw functionality, disruptors compete on simplicity, affordability, and accessibility.
The video game industry offers a clear example of this distinction. Sony and Microsoft are largely following sustaining strategies that appeal to fast-fingered teenage boys who want the most realistic game play imaginable. Nintendo is consciously trying to expand the market with its easy-to-use DS Lite and Wii products.
2. There are many well-known examples of incumbents being disrupted: Eastman Kodak and digital photography; full-service airlines and the no-frills carriers, full-service stockbrokers and the low-fee, low-service online brokers to name a few. Can you give examples where incumbents have successfully fended off disruptive innovators by disrupting their own business?
In the list you rattled off there is at least one incumbent success story: Charles Schwab. Schwab introduced its discount brokerage model in the 1970s, then created a separate online offering in the 1990s, which today constitutes a significant portion of its core business. Hewlett-Packard also successfully managed a disruption in its core printing business when it introduced inkjet printers, which were disruptive to laser jet printers. A third example comes from Dow Corning. Earlier this decade Dow Corning introduced Xiameter, a low-cost distribution channel that has allowed it to prosper in the commodity tiers of the silicone market.
Generally speaking, disrupting your own business is quite a tough proposition. We recommend that companies start by thinking about what other businesses they could disrupt. For example, Procter & Gamble has created about a $3 billion fine fragrance business by bringing its disciplined approach to brand management to "democratize" a high-end, fragmented market.
3. You are proponents of segmentation using a "jobs-to-be-done" approach. In "The Innovator's Guide to Growth" you describe a case where new car tires did the job of improving the acoustical environment in the car rather than solving the problem of a flat tire. Can you share other examples of products being used to do jobs that aren't immediately obvious?
Almost any product has non-obvious competition that becomes clear once you use the jobs-to-be-done lens. Take Baby Einstein, a line of videos produced by Disney. The relatively simple, 30-minute videos feature stimulating visuals backed by a classical music score. The entrepreneur who created the product capitalized on the so-called "Mozart effect" that suggests that listening to classical music boosts a child's mental development. Why do people hire Baby Einstein videos? You might say education, and that's part of the answer. But in reality, Baby Einstein is a guilt-free babysitter. The television itself is a great babysitter, but parents who use it are racked with guilt. Baby Einstein lets parents get 30 minutes of peace, without the guilt.
4. It could be argued that in 2008 the theory of disruptive innovation is well developed. If this is so, why do we continue to see so many incumbent firms ignoring the lessons provided in the disruptive innovation suite of books, including "The Innovator's Guide to Growth?"
This is a great question. I think there are two reasons. The first is that even though you know in the long-term disruption might get you, in the short term you can stick to "business as usual" without any pain. It's the same reason people don't exercise, or fail to routinely take preventative medication. Of course, the truth is signs of future trouble are almost always obvious if you look at business the right way, but it is too easy to ignore those signs.
The second reason is there still aren't sufficient examples of large companies that have "broken the back" of disruptive innovation. As that changes over the next few years, and as Boards of Directors increasingly recognize that the roots of long-term malaise are recognizable early, I suspect many more companies will seek to develop a competency in disruptive innovation.
5. As a small business owner, I have found some of the lessons and tips in "The Innovator's Guide to Growth" to be quite inspirational. It appears that if staff working for an incumbent describe my product offering as a "toy" or "crumby" relative to the incumbent's offering, I may be onto a good thing! What other lessons does the "The Innovator's Guide to Growth" have for the owners of small businesses?
Thanks! Innosight itself is a small (but growing!) business, and we follow the lessons in the book in our day-to-day work. We seek to understand the real job current and potential customers are trying to get done. We try to understand where we can be "good enough" compared to competitors, and where we have to be much better. Whenever we have a new idea, we try to find quick, simple ways to test it. And we always watch out to make sure we don't get trapped in our own paradigm by routinely bringing outside perspectives into the business. I think any small business owner can benefit from the discipline of trying to understand the true nature of market opportunity, to develop different ways to seize that opportunity, and to act in ways that allow you to prudently manage innovation efforts.
6."The Innovator's Guide to Growth" suggests that business schools need to be aware that they, too, are not immune from disruption. Are you seeing any evidence of this in 2008?
It is interesting. There are many more options for people to seek on-the-job training or develop particular skills in low-cost ways. Further improvements in technology and the spread of Internet-based video will only create more ways for people to learn without going to centralized, expensive programs for two years. Yet, applications to many top business schools surged in 2008 as the economy sagged. It will be interesting to watch what happens when the economy improves, because I suspect the conditions will be in place for many business schools to start feeling real pain. The schools that are most immune from that pain are those that provide difficult-to-replicate value, such as access to a network of graduates, or personal branding. Those that don't ...
7. In what industries do you expect to see more disruptive innovation in future?
In every industry! Seriously, we think that we've just seen the beginning of disruptive developments in the health care industry. Clayton Christensen has a book coming out in a few months on just this topic. I think other service-based industries, like education, consulting, and legal services are going to see some real changes brought along by disruption. Of course, energy-related industries have never been more ripe for disruption. Finally, I think the travel industry is going to see true transformation over the next decade with the rise of high-quality videoconferencing and convenient point-to-point air taxis.
Thanks Scott for sharing those insights.
posted by Gordon Graham at 9:14 AM
2 Comments:
Innovation leaders often fall prey to what I call the Pete Rose trap, that is, settling for singles instead of swinging for the fences. Falling for the Pete Rose trap means that organizations fail in the long run. IG2G gives leaders the tools they need to justify, plan, create, and execute a balanced innovation strategy that includes the all-important disruptive element.
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Angelinjones
CONSUMER GENERATED MEDIA
Gordon,
Thanks so much for your participation in this virtual book tour. Your questions have provided nice insights.
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