The "Competitive Intel" Episode 15 Transcript – Hunting for Disruptive Innovation

Clayton Christensen’s book, The Innovator’s Dilemma, is well known for its focus on fostering disruptive innovation. From a competitive intelligence standpoint, a secondary focus is at least as important—how to differentiate between a disruptive innovation and a sustaining one. Just as a substitute in Porter’s Five Forces is hard to identify but potentially game-changing, recognizing disruptive innovation is a powerful, vital capability.

Some Characteristics of a Disruptive Innovation

Consider the impact of drone journalism on the established news industry as it becomes more pervasive with changes to FAA regulations coming in 2015. Gauging drone journalism’s potential as a disruptive technology, start by considering whether it is simple, reliable, and convenient, at a low price point. Is it a combination of existing technologies, does it focus on a small or niche market, and does it focus on addressing a single problem?

With the exception of a low price point, these factors do apply. In fact, comparing the cost of a small drone with that of a traffic helicopter, for example, the drone is considerably less expensive. A smaller news organization for whom a helicopter is out of reach might be able to afford a drone, or even several, more cheaply than a helicopter.

Factors that Point to a Sustaining Product or Service

Innovations that are more aptly considered sustaining than disruptive are likewise associated with certain characteristics. For example, is it focused on extending or enhancing an existing product or service? Does it target larger markets, and is it complex, with significant support requirements?

Small radio-controlled drones have the potential to provide completely new approaches to reporting, while at the same time, they are built to be simple to use, right out of the box. Neither flying a device similar to a model airplane, nor streaming video from a small portable camera is a significantly complex undertaking, and therefore, the use of drones in journalism doesn’t neatly satisfy these characteristics of a sustaining innovation.

Gauging Whether a Competitor Could Launch a Disruptive Innovation

When considering the potential for a disruptive innovation, consider the culture and related factors at the companies responsible. The likelihood of such a launch is increased in incubators or other organizations small enough to focus on what may be a small win. Likewise, there is greater potential if the innovation is unlikely to detract from key profit-generating product lines, or if the company sees enough potential in the new product to compensate for lost profits.

Less tangible but equally important factors include a willingness to accept risk and a tolerance for allowing business units to speculate on new initiatives that could potentially fail. If your competitor has a history of incubating ideas that may not immediately (if ever) generate huge revenues, that company may be one to be concerned about.

By Sean Campbell
By Scott Swigart