In a previous article I analyzed the various innovation definitions and concluded that in all of these definitions innovation is comprised of the processes that lead to inventing and the commercialization of that invention.
Innovation = Invention + Commercialization
An invention in turn can be thought of in terms of the elements and systems that make up the invention; plus the performance and benefit that the invention delivers to the end user. Commercialization can be thought of in terms of the customers that will use the invention; the needs the invention is fulfilling; the industry the invention is disrupting, creating or entering; and the markets where the invention will be applied in.
Invention = Element Change + System Change + Performance + Benefit
Commercialization = Target Customers + Need Creation + Industry + Market
The following is a break down of Invention and Commercialization, along with the questions that need to be asked to determine the type of innovation.
Invention
Element ChangeElement Change deals with any element that makes up an invention. An Element can be a molecule in a drug, power supply in a computer or a step in a new business model.System Change
Questions to ask when determining the type of innovation you are dealing with are:
- Q1: How different are the invention's elements compared to previous versions?
- Q2: Is there one specific element that has dramatically changed?
- Q3: Is this change due to new materials, new technologies, or other new inventions?
For example for a disruptive innovation you would expect to find very little element change, as Christensen states in The Innovators Dilemma, “… disruptive innovations were technologically straightforward, consisting of off the shelf components put together in a product architecture that was often simpler than prior approaches.”
On the other hand, a radical innovation can take place on either the invention side or the commercialization side. This means that it can be either a radical invention or have a radical impact on the commercialization end. Therefore, the elements of the invention will be either be a dramatic leap forward or like a disruptive innovation, be technologically straightforward.
A system can be a drug made up of different molecules; a car made up of different components or a business model made up of different elements.Performance
Questions:
-Q4: How different is the invention's structure compared to previous products in the industry?
-Q5: Is there one specific aspect that has changed or has everything about the structure changed?
-Q6: How different are the linkages between the elements?
-Q7: Has this structure existed previously?
-Q8: Has this structure existed in this industry?
-Q9: Is the new structure dramatically different from previous structures?
Disruptive innovations tend to have a great deal of system change. Although the elements or components tend not to be new, the way they are put together is generally very new. By contrast, incremental innovations, which most new product development falls under, would have very little system change.
Performance is focused purely on the invention and not on any commercialization aspect of the innovation. Performance is based on functional benchmarks used by the industry to determine how well a product performs. It can be acceleration for a car, efficacy for a drug, turnover ratio for a business model or strength for a material.Benefit
Questions:
-Q10: Does this invention dramatically under-perform or outperform the current innovation(s)?
-Q11: The invention is not consistent with the current innovation(s) performance trajectory?
In a paper written by Christensen he describes an example of when a new disruptive innovation underperforms according to the current benchmarks. The example is of a 3.5” hard drive that was introduced by Conner Peripherals. In this case the performance measures that were used by the established 5.25” drive makers (current industry leaders) was cost-per megabyte and storage capacity. The new 3.5” drives underperformed with respect to both benchmarks.
Benefit is concerned only with the invention and not with the market.
Questions:
-Q12: Does this invention offer a significant benefit such as cost, size, convenience where it outperforms the current innovation?
The 3.5” drives introduced by Conner Peripherals underperformed when compared to the established performance measures, however they offered other important benefits like ruggedness, lightweight and low power consumption.
Commercialization
Target CustomersQuestions:Need Creation
-Q13: Is the innovation targeting over-served (high end - pioneers) or underserved (unsophisticated, low end) or not served customers?
-Q14: Is the innovation not targeting the current customer base?
If the innovation were targeting current customers then it would not be a disruptive innovation. The innovation could be sustaining, radical, incremental or other depending on how you answer the other questions.
Needs is focused strictly on the commercialization end of the equation and not the invention.Industry
Questions:
-Q15: Does the innovation address a set of unaddressed needs?
-Q16: Does the innovation not address the current needs?
-Q17: To what extent does the new innovation address “new” or “latent” customer needs?
-Q18: Is the new innovation reformulating the established mindset of what customers want?
The further away an innovation gets away from the current needs the more likely that the innovation in question is a potential disruptive innovation.
Questions:Market
-Q19: To what degree does the new innovation require fundamental destruction of previous knowledge and skills for incumbents to compete?
-Q20: To what extent does the innovation affect the relationship among current network players?
-Q21: Is a totally new network required to commercialize this invention?
-Q22: To what extent are new production systems, procedures and equipment required to commercialize this invention?
-Q23: To what extent does it impact the supply chain?
-Q24: To what extent does it impact the value chain?
-Q25: Does it destroy linkages and interactions among current players in the chain?
Architectural, Disruptive, Discontinuous and Radical Innovations all shakeup the established industry. In all cases the innovation that is introduced into the marketplace requires different players or different linkages among current players to get the product to market. The established industry which has worked years to fine tune its processes and methods to generating the current product are unable or unwilling to alter their processes to produce an innovation which requires totally new methods and processes.
Questions:Although many, including myself, are fond of classifying innovations like discrete entities with clearly defined borders, it is more useful to view innovation along a continuous spectrum from incremental to radical (breakthrough.) It is clear to see the difference between incremental and radical, but most other types of innovation seem to flow and overlap with each other. The framework described in this article is an attempt to understand where the innovation you are dealing with lies along this spectrum.
-Q26: Is the target market larger or much smaller than the current market?
-Q27: Is there a high sales growth?
For Radical, Disruptive, and Discontinuous Innovations we would expect to see very high sales growth. In the case of disruptive innovations and radical innovations the target market is generally smaller than the current market. Although this appears to be counter intuitive, it actually makes sense. Radical and disruptive innovations often generate greater interests in underserved or not-served markets. These markets tend be smaller than the current market. This is one of the reasons that managers often have a hard time convincing the organization to invest in a disruptive or radical innovation.
Hi Remy,
ReplyDeleteInteresting analysis; I like the concept. All of these questions can help provide insight into one’s planned innovation. However, I think you can simplify the approach for the narrow purpose of classifying as potentially disruptive or not.
In essence, the questions raised on the commercialization side of your equation are really the key when combine with understanding benefits. That is that these aspects really help to define the value map and job fit that the innovation has as compared to the incumbent product. Disruptive innovations typically don’t map as well to the mainstream customer as the incumbent. However, the do map very strongly to an identifiable job which is out of the mainstream.
This dynamic is quite important to the disruptor as legacy constraints and inertia will work against the incumbent in this new space, giving the disruptor the room for growth that is needed to succeed. From this new position, as the disruptive technology moves on its s-curve trajectory it can then supplant the incumbent as its value prop displacement increases.
BTW, Enjoyed “Grabbing Lightning”.
Great initial questions and a very well-thought out blog. I guess I tend to think that in any given situation, how you ask the question will necessarily change. For example, sometimes there are several good ideas and a company is trying to decide which is best. Secondary factors--such as the ability to monetize future improvements FROM that platform--may be important drivers.
ReplyDeleteSimilarly, I know for me at least, if you do not have much of an infrastructure, knowing how easily readily resources can be assembled may be far more critical. I have met so many entrepreneurs that have great ideas--with market validation that meet a valid unmet need--but they lack the wherewithal to get it done. I think some of your questions certainly address this issue indirectly but it seems like many of them are really geared toward large co or at least established companies.
I went to an interesting seminar on innovation recently where they advise STARTING with unmet needs and then innovating. So they asked some of these questions BEFORE innovating (to establish the groundwork for the brainstorming) and some of the others came after. In other words, it might be interesting in your framework to give some thought to which questions can be asked before, which can be asked during and which can only be asked AFTER new ideas have been formed.
I am giving that particular model a lot of thought myself as I work with startups and often tell them--look at your people, look at your contacts, look at your expertise---THIS is your playground in which to play. Ideas are only good if they can be executed so let start there. It does risk losing ideas but if it also means focusing on those ideas with the greatest chance of actually being realized--isn't that the real innovation?
Thanks again for sharing. I look forward to more blogs!
It's a thorough list, and I won't duplicate the fine comments you've already received. One thing that your article left me curious about - from your perspective, what are the drivers that demand innovation assessment? The process you've mapped out illustrate a detailed method, but how would you classify the motivations? When does (business, customer, academia, ...) demand an innovation assessment?
ReplyDeleteFascinating article!
Jim,
ReplyDeleteThat's a great question. I find that I go through this type of analysis when performing an assessment of a firm's innovation capability & capacity. Also, it is worth wild exercise to undertake when attempting to decide how you want to deal with a new idea. Do you want it to be disruptive or is it better for it to be sustaining? Both have very different characteristics and should be dealt with differently by the firm.