If you read this blog regularly, you know what iP2Biz does, and the very short story is this: our fixed-price engagements help big companies innovate without changing who they are as an organization. We will never recommend that a client reorganize their business units, reengineer their culture or install new processes. We don’t “consult;” we get stuff done.
But now I’ve used the word “innovate.” You know what’s coming next, right? Of course you do: disruption. Everybody with a business or an idea for a business is talking about it all the time. “We’re going to disrupt this,” and “We’re going to disrupt that.” But we know with a high degree of certainty that they won’t because—as we pointed out in this earlier post—you can’t engineer disruption. So why is everybody going on about disruption all the time?
One answer is that “disruptive innovation” is a buzzword, and it has been since the moment Clayton Christensen coined the term in 1997; that’s a long shelf-life for a business buzzword, and it may one day break the record which I believe is currently held by “synergy.” But this answer is not enough. I think entrepreneurs use “disrupt”—even though it is inaccurate—simply because they view it as a concise way to communicate what they hope to accomplish: start a great, profitable company and do big things. So if not “disrupt,” what?
We faced this issue at iP2Biz very early in our existence. We didn’t want to run around telling our clients that we were going to deliver disruptive innovations because (1) that’s a promise no one could keep (and we like to keep our promises), and (2) it would not set appropriate client expectations which leads, of course, to unhappy clients. So we started describing “breakthrough innovations.”
In the taxonomy of innovation, Christensen gave us sustaining innovation and disruptive innovation. Sustaining innovation is the stuff big companies do really well: make their flagship products a little better every year by listening to their customers, observing the market and applying disciplined, straight-line business processes to turn that data into product improvements. Disruptive innovations (which—incidentally—are seldom launched by big companies) are those innovations that upend a market, bringing in new customers and displacing (or destroying) entrenched incumbents; think about what digital cameras did to the producers of traditional film.
But what about those things a company does that are really great but not disruptive? Those are breakthrough innovations. A good way to think about this is in relation to market share: sustaining innovations let you keep the market share you already have (i.e. adding streaming Bluetooth audio to a car stereo because competitors are adding it), breakthrough innovations let you increase your market share significantly (i.e. the launch of the Toyota Prius into the market for fuel-efficient cars), and disruptive innovations allow you to enter at the bottom of a market with a new product that eventually takes over and defines that market (i.e. Amazon’s entry into the bookselling market).
So there’s your expanded innovation taxonomy: if it’s a great innovation that brings you new market share but it’s not disruptive, it’s a breakthrough innovation.