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Disruptive InnovationDisruptive Innovation
Corey Arnold, Matthew Hamilton
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OutlineOutline
� Introduction and Examples
� Conceptual Framework
� Barriers to Disruptive Innovation
� Vodaphone
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What is Disruptive Innovation?What is Disruptive Innovation?� Originally described by Clayton
Christensen in The Innovator’s Dilemma (1997) � Disruptive innovations begin as lower
quality and less desirable versions of existing products and services� As they improve, gain attention of main
customer population� Often supplant existing products and
services
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ChristensenChristensen’’s Disruptive Innovations Disruptive Innovation
Thomond, Herzberg and Lettice. 2003.
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Examples of Disruptive InnovationExamples of Disruptive Innovation
� Transistor radios� Ryanair� Mobile phones� Community colleges� Online services (banking, travel,
education)
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Case 1: Transistor RadiosCase 1: Transistor Radios
� http://www.slideshare.net/Christiansandstrom/jealous-of-her-transistor-radio-presentation
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Case 2: Case 2:
� Offered low-price, point-to-point fights� Incumbent airline companies (i.e. British
Airways) saw no threat to their higher-quality services� As Ryanair improved in quality, and as
people started noticing Ryanair’s low prices, a new standard in the air travel market was created� Ryanair is now more utilized than British
Airways
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Case 3: Mobile PhonesCase 3: Mobile Phones� An example of a disruptive innovation
that is being further disrupted within itself� Mobile phones have all but replaced
landlines� Innovations within mobile phone
technology are now emerging◦ Cheaper, entry-level phones (Nokia 1100) are
increasingly popular over fancier, more expensive phones (similar trend to Ryanair)
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Harnessing Disruptive InnovationHarnessing Disruptive Innovation
� Disruptive innovation can be a good thing
� Organizations need to recognize disruptive innovation◦ As a source of advancement◦ As a potential threat
� Thomond, Herzberg and Lettice (2003) investigate some ways that companies do this
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Conceptual Framework of Conceptual Framework of Disruptive InnovationDisruptive Innovation
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Opportunity RecognitionOpportunity Recognition
� “The Brainstorm”� Generating ideas
◦ “past, present and future” approach
� Reflect on past events◦ Reveals how other innovations occurred
� Awareness of current trends� Thinking through possible scenarios
◦ Reveals what may be useful in the future
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Conceptual Framework of Conceptual Framework of Disruptive InnovationDisruptive Innovation
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Opportunity DevelopmentOpportunity Development
� “The Plan”� Selecting ideas� Focusing these ideas into probable plans
of action◦ How can the organization arrange itself to
incorporate the innovation?◦ What is the “path to disruption”?� Target markets/niches
◦ $$$???
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Conceptual Framework of Conceptual Framework of Disruptive InnovationDisruptive Innovation
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Solution DevelopmentSolution Development
� “The Setup”� Bringing together the teams and
processes that will best locate target niches and deliver the innovation� Fleshing out ideas into pre-manufactured
and pre-commercialized products and services
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Conceptual Framework of Conceptual Framework of Disruptive InnovationDisruptive Innovation
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ExploitationExploitation� “The Action”� Selects the best set-up innovations and
creates marketing and distribution channels� Starts making long-term plans for the
innovation� Also a last checkpoint
◦ Will the innovation be desired by the target niche market?
◦ How will incumbents react to the innovation?◦ Will this be detrimental if it fails?
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And now to MattAnd now to Matt……
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Barriers to Disruptive InnovationBarriers to Disruptive Innovation
� Four main barriers identified by a consortium of upper management people from various companies across the world◦ Strategic importance of disruptive innovation
is not understood◦ Inability to generate disruptive concepts◦ Inappropriate funding◦ Product development routines cater to
continuous innovation
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Strategic Importance Not Strategic Importance Not UnderstoodUnderstood
� Organizations are unaware of the importance of disruptive innovation◦ Can’t see it’s value◦ Can’t see it’s threat
� Cause of downfall of British Airways
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Inability to Generate Disruptive Inability to Generate Disruptive ConceptsConcepts
� Organizations don’t contain the brainpower or resources to come up with ideas for disruptive innovations
� Can’t move forward with an idea if there’s no idea to begin with
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Inappropriate FundingInappropriate Funding
� Not enough money
� Money isn’t flexible
� People with the money aren’t flexible
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Product Development isnProduct Development isn’’t t Conducive to Disruptive InnovationsConducive to Disruptive Innovations
� A certain level of flexibility is required to deliver disruptive innovations
� If an organization has a set process of product development, it may not accommodate new disruptive innovations
� Need to acquire an open-minded mentality
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And nowAnd now……An Arnold-Hamilton Production:
Office DisgraceOffice Disgrace
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Case Study:Case Study:� Thomond, Herzberg and Lettice (2003)
investigated some of the ways Vodaphone dealt with these barriers� Vodafone Pilotentwicklung GmbH (v-pe)
is a part of R&D that handles new technologies and applications◦ Have to deal with undeveloped technologies,
customers with unsure future needs� Disruptive innovation is part of their daily
activity
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Case Study: Case Study:
� Vp-e will redefine its technological strategy to fit disruptive innovations� “v-pe academy” enables employees,
students and external partners to exchange and discuss ideas, projects and interesting topics surrounding daily work� Stakeholders partake in these discussions,
facilitating knowledge in information flow
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Case Study:Case Study:
� ‘ide[e]fix forum’, every 4-6 weeks� No-doors architecture� Employees present potentially innovative
ideas/fragments of ideas� These presenters communicate with
promoters from outside their normal working network to illicit and refine ideas� Strategically interesting ideas are
presented to business management
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Case Study: Case Study:
� V-pe focuses on adequacy and originality of ideas/innovations
� Innovations cannot develop to term if they aren’t adequate◦ Thus, vp-e is aware that the adequacy and
originality of proposed ideas may not be apparent at first
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� “Business plan light” is a tool used by v-pe allowing employees to present ideas in one step
� Allows for quick and easy evaluation of fiscal and logistical aspects of a potential innovation
Case Study: Case Study:
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In ConclusionIn Conclusion……� Disruptive innovation begins as less
desirable, but eventually creates a new paradigm shift� Harnessing disruptive innovation is a
process, from generating ideas to putting these ideas into action� Certain barriers exist to disruptive
innovation� Vodafone exemplifies ways to overcome
these barriers
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Issues to DiscussIssues to Discuss
� Vodafone is a large organization◦ Has separate R&D division
� How would smaller companies overcome barriers to disruptive innovation?�What other barriers to disruptive
innovation may exist?
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Thanks!!!Thanks!!!