Disruptive Innovation is NOT a Business Strategy

Stop trying to disrupt. Start changing the world.

In the late 1990’s when I was running the strategy consulting group at HP, we invited Clayton Christensen, the iconic Harvard professor who wrote The Innovator’s Dilemma and popularized the term “disruptive innovation,” to come speak to us.

We asked him a simple question, “How do you do disruptive innovation?”

Christensen described it well. He shared compelling examples. He argued that companies, and entire industries, can be “disrupted” by unforeseen competitors – new players that deliver products at a fraction of the cost as current options yet still meet the most important customer needs. The result? Customers leave the old way of doing things and move to the new. Existing leaders die. New leaders prevail. Disruption occurs.

Although I left HP a few years after that, Christensen’s words stuck with me. Fast forward to today.

Disruptive Innovation is Business’ Biggest Paradigm

Just about everyone wants innovation. We’ve seen the casualties of disruption: Kodak; Blockbuster; Borders; Blackberry. And most of us want to avoid a similar fate ourselves. Better yet, we want to reap the benefits of being a disruptor – like Netflix, Amazon, and Apple.

Few people know that the fundamental concept of disruptive innovation wasn’t new when Christensen introduced it. In 1942, Joseph Schumpeter, an Austrian-American economist, described the dynamics of “creative destruction” – essentially the same thing as disruptive innovation. Then, in 1994, MIT’s James Utterback published Mastering the Dynamics of Innovation which described how the “ice harvesting industry” was displaced by “ice boxes” (aka refrigerators) and how manual typewriters were stamped out by IBM’s Selectric electric typewriter. All this was years before the word “disruptive innovation” made it onto the scene.

Disruptive innovation isn’t how innovation works in the real world when you’re in the process of doing it – only in retrospect by storytellers.        

Most people familiar with the research on innovation also know about “paradigms.” Paradigms are mental models that contain unquestioned assumptions about how things work. The world is flat and the sun revolves around the earth were two paradigms that were seen as common knowledge. These assumptions are accepted as truths, until they’re turned upside down and replaced with an alternative paradigm. Paradigms have, and will always exist. Just like “quality” and “reengineering” were the business world’s lenses in the 1980’s and 1990’s, disruptive innovation is one of today’s biggest paradigms.

If Steve Jobs Didn’t Try To Do It, Why Should You?

The reality is, most “disruptions” don’t start out that way. Steve Jobs, arguably one of the greatest disruptive innovators of all time, said the same thing. “When we created the iTunes Music Store, we did that because we thought it would be great to be able to buy music electronically, not because we had plans to redefine the music industry.”

Looking back, it’s probably not too strong of a statement to say that Apple disrupted the music industry. But did Jobs and Apple know it was doing it at the time? No. Was it part of their strategy? No. They created iTunes because it felt like the right thing to do to add value to customers and the world. Simple as that.

Take two other modern-day disruptors. Larry Page and Sergey Brin didn’t start Google with the intention of transforming the Internet, buying YouTube, or launching Android. Their very first step – and what kicked off their journey – was all about finding a more effective way to prioritize library searches for academic research papers online. Yes, library searches. From there, they realized they could also index web pages. And, at first, they resisted including advertisements next to the search results. Good thing for them (and Google shareholders) they changed their minds.

When we set our sights on creating a disruptive innovation, we place unrealistic expectations on our organizations, people, and ourselves. We lose sight of the realities that are inherent in the innovation process. It’s like seeking fame for fame’s sake versus simply having a great talent that leads to great performances – which then results in fame. It clouds our sense of what we’re really doing.

If You Only Swing for the Fences, You Won’t Score on Singles, Doubles or Triples

The theory of disruptive innovation can indeed be helpful for understanding how technology has played a disruptive role in shaping the business and competitive landscape. But when this is the dominant lens and you’re obsessed with hitting home runs (or being homered upon), you miss a lot of other opportunities to score. Just take Kodak for example. About 10 years before filing for bankruptcy, in 2003, the company hired the head of HP’s Inkjet printer business as a “big bet” to help them jump into the printer business as a response to rapidly falling 35mm camera and film sales. It took a single swing for the fences by trying to enter a billion dollar industry and become the low-cost provider of both printers and ink – the classic disruptive innovation strategy. It missed. Goodbye Kodak.

The model above is from my latest book, The Invisible Advantage: How to Create a Culture of Innovation. It's all about how to manage the three types of innovation simultaneously.

Unlike disruptive innovation, “incremental innovations” are minor tweaks to existing products or services in the form of new colors, flavors, features, benefits, or aspects of the customer experience that are fairly quick and easy to do. The principle behind “incremental” is much more strategic and goes much deeper than the term suggests. Small tweaks, gelled together with the right mindset and approach, are oftentimes what actually add up to big breakthroughs.

Between incremental and “disruptive” innovation lies “sustaining innovation.” Sustaining innovations aren’t necessarily about big bets. But they’re not about little tweaks either. They’re about trying something that feels like a bit of a stretch, and then seeing what happens. If they work, they can “sustain” the business (and ideally grow it) into the long term. Sometimes they flop. But, now and then, they go big. When they do, sometimes the storytellers look back and call them “disruptive.”

Another company that has steered clear of disruptive innovation by going after modest sized opportunities is Fujifilm. Fifteen years ago, the company stood at the same starting line as Kodak. Today, Kodak is bankrupt while Fujifilm has a $37 billion market cap. We don’t think about Fujifilm as a disruptive innovator. It isn’t. But by most measures of success, they’ve weathered the storm and come out the other end quite successfully. They’ve continued their march toward adapting to the digital world by getting into 3D photography. They’ve entered dozens of new businesses ranging from television cameras, to medical products, to thin film packaging for candy. Disruptive innovations? No. Sustaining innovation was the savior – and the company’s growth engine.

In today’s innovation-obsessed world, “disruption” encapsulates the Holy Grail. Incremental and sustaining innovations are the all-too-often overlooked steps that lead you there. The formal theory of disruptive innovation is fundamentally about technologies and products. The real world rewards those who build new business models, extend brands, create new channels, find new markets, redesign customer experiences, re-invent business processes, and other stuff that most seasoned innovators know truly shape the future.

We need to see through the veneer of today’s disruptive innovation frenzy. Real innovators fall in love with big hairy challenges, solve meaningful problems, and create exciting solutions that customers never knew they needed. Those are the seeds of real opportunity. And if you do it well, someone might look back and say, “nice disruption.”

Soren Kaplan is the best-selling and award-winning author of Leapfrogging and The Invisible Advantage, an affiliate at USC’s Center for Effective Organizations, a columnist for Inc. Magazine, a leading keynote speaker, and the founder of Praxie.com. Business Insider and the Thinkers50 have named him one of the world’s top management experts and consultants.

This article adapted from the original copy from Inc. Magazine