Article Contents
The business’ culture will often decide what opportunities are exploited and which ones are ignored. Business culture also influences which tools, practices, and methods are used when developing new product development and innovation strategies.
For example, product development methods that emphasize technical functionality can derail a company’s effort to enter new markets. These methods fail to similarly emphasize the role of customer development, particularly in unproven markets (Steve Blank, 2013).
Disruption
In an article of the MIT Sloan Review, researchers King and Bartartogtokh (2015) investigated Clayton Christensen’s theory of disruption . They aimed to better understand the model.
Underlining all drivers across the model is an understanding the customer’s needs (current and future).
Four factors are found to in influence market disruption:
- technology absorption,
- sustaining innovation,
- disruptive innovation, and
- customer adoption.
Additional factors unanticipated by the model also play a significant role.
In particular, business agility is crucial. Responsiveness to targeting and serving the ‘incumbent’s less valued (and thus less served) customers’ is important. Together, they represent an opportunity to grab marketshare.
These findings show some cause of optimism for startups and new entrants. They may be interested in entering existing or new markets. Alternatively, they might focus on creating new products.
Disruption Insights
Taking the perspective of startups in mind, the following 11-insights can be incorporated into disruption efforts at the stages of idea generation, customer development, customer validation, and product/service development:
Not Exceeding Expectations
Focusing on customer needs may present an opportunity for a new entrant. They can provide a simpler product that is better matched to the target customer’s needs. Sometimes ‘better’ means more focused and easier to use.
Exceeding Expectations
Focusing on customer needs may present an opportunity. A new entrant can provide a simpler product. This product is better matched to the target customer’s needs. Sometimes ‘better’ means more focused and easier to use.
Lower Level Innovation
Targeting lower innovation targets may present an opportunity to enter a market. While the incumbent focuses on their more lucrative customers, it leaves the incumbent exposed. Perfecting lower tier product/ service offerings can create a gateway through which additional customers and market share is captured.
Customer Development Focus
Sustained innovation is more effective for some models than disruptive innovation. This is true when the business continues to engage with the customer. It must map out the customer’s evolving needs to the product/services changing specifications. This includes the ability to change the product/ service offerings as the customers needs adapt over time.
Technology Adoption
Keeping up with the industry’s technology is a challenge. Changing skill sets and competencies also present difficulties to incumbents dedicated to their existing business model. This includes not only adopting new standards for establishing them as well. The latter sets the standards for the others to follow which often creates a competitive advantage for ‘first movers.
Exit Planning
Incumbents should not always challenge disruptive innovation directly. This is especially true if the incumbent is unprepared to change their business model. Instead, exiting the market niche or refining the business’ target (and reallocating unused resources to other projects) may be justified.
Culture
Building a culture of change, agility, and disruptive innovation can enhance the business’s ability to compete. It can also help the business challenge and gain traction in a new market. In contrast, legacy architecture will increase exposure to being undermined by new entrants.
Scaling
Business models that require a certain scale in order to be profitable can limit market entrants. Being able to scale one’s business model, methods, tools, and practices can be a significant advantage.
Agile Business Model
When it comes to disruptive innovation, there is no one-size-fits-all solution. Customization is a competitive advantage for those business models. These models improve on their methods, processes, and tools. They deliver customized solutions. This can include developing a basic product or service that is standardized. It can then be customized at the last stage before delivery.
Disruptive Elements
These change over time, and depend on understanding customer needs, and industry’s evolution. Monitoring these trends and changes can be a competitive advantage for businesses. It benefits those with the foresight and competencies to respond first.
Rate/ Type of Innovation
The model of disruptive innovation recommends exceeding the customer’s expectations. This makes particular sense as it can help engage some of the market’s most valuable customers. But alternative product/service configurations remain essential to serve the rest of the market.
Only offering product/service offerings that exceed existing needs can relinquish market control. New entrants willing to provide lower-level products/services may gain control.
Incumbents have been found to be less likely to respond to attacks on lower value areas of the market. As a result they miss the opportunity to protect themselves from future disruption as the new business gains stronger footing. A stronger footing can be achieved through disruptive innovation in addition to exceeding customer’s needs.
There are instances where adopting new technologies is essential to increasing efficiencies and providing added customer value. Aligning technology acquisition with the business’ core competencies and customer needs is key.
Innovative Business Models
Business model innovation represents another significant area to introduce disruption. For example, a new business can weaken an incumbent with lower innovation. This is further enhanced when a new business model is introduced. This occurs when an incumbent’s existing patents, trademarks, and projected intellectual property limit the incumbent’s ability to respond.
An incumbent’s over-commitment to their business model can become a weakness. It constrains their ability and willingness to respond to new entrants. In contrast, new technologies are not disruptive if incumbents are able and willing to respond.
A Product Development Methodology
The business’ culture influences what opportunities are exploited and those that are missed. Business’ must continue to:
- Find products and services that play to their strengths,
- Identifying changing needs and
- Opportunities to improve on areas of weakness,
- as well as Seeking to build the technologies and competencies to serve those needs.
How are product/ service development opportunities evaluated in your company? When does your company pivot to explore new innovations and opportunities? When does alignment become a constraint or liability?
Disruption and product development innovation is not always about providing new product/service offerings that exceed what is now available. It is also about understanding the market, the customers served, building upon your strengths, and exploiting your competitor’s vulnerabilities.
Business models that have the necessary competencies are better able to adapt to changing customer needs. They can respond to market challenges more effectively. These models help establish the product/service standards for the future. When it comes to disruptive innovation, there is no one-size-fits-all explanation of where challenges may surface. There is also no single solution to solve these problems.
Disruption is within reach for those business’ that have the foresight, the tools, and the commitment.
- The goal of the product development process is to create additional value. To introduce better solutions or products than what already exists.
- Creating products that solve no existing problems carries risks. These products may absorb company costs but find no customers. They also create no new value.
- The topic of disruptive product innovation focuses on how to unseat the competition and gain market share.
- The methodology focuses on both the customer and technical aspects of product development. It aims to find solutions that are not easily replicated by the competition.
Product Innovation: Medical Devices & Regulatory Requirements
The following infographics provide a high level overview of regulatory requirements driving both product specification and innovation.
Conclusions
Steve Blank’s (adapted, 2013) customer development model provides a general framework for new businesses. It helps them develop new innovative products. The model also enables them to disrupt the competition. The following documentation and planning tool articulates the product development process. It includes both a customer focus and a technical development focus (Blank, 2013).
Disruption is not limited to the creation of physical products. It also includes the development of new methods, practices, and tools that improve how the business model performs. As markets evolve (and contract) the business models that serve them are forced to adapt.
Those that are first to adapt have a competitive advantage. This includes a consideration of the business’ supply chain and product development methodology.
Travis Barker, MPA GCPM
Innovate Vancouver
Innovate Vancouver is a Technology and Business Innovation Consulting Service located in Vancouver, BC. Contact us to help with your next project!
