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18 Oct

Disruptive innovation, a concept coined by Harvard Business School Professor Clayton Christensen, who succumbed to cancer in the past few months, offers an explanation for how large companies fail to catch up with rising technological waves. Christensen based innovation in the article titled “Disruptive technologies: catching the wave”, which was also published in the Harvard Business Review in 1995 with Joseph L. Bower, and later in his book “Innovator’s Dilemma”[1] in 1997. divided into two as sustainable innovation and disruptive innovation.

Sustainable innovations are generally innovations that are realized by improving existing products according to customers’ performance criteria. In this respect, market research is indispensable for companies that want to make sustainable innovations through product or service improvement. Market research leads to a good understanding of consumers’ performance measures, giving companies the opportunity to develop products or services that best suit consumers’ tastes. Often large companies like Apple excel at sustainable innovations. Firms that analyze the expectations of consumers well and can direct their research and development (R&D) activities accordingly can increase their market share and profitability through product development. Disruptive innovations are innovations that create disruptive effects on the market by unexpectedly creating a new value network. Destruction describes a process in which a relatively small company with few resources can successfully challenge established large businesses. In this respect, disruptive innovations are small or medium

Disruptive innovation has three key components: disruptive to the market leader, disruptive to infrastructure, and disruptive to the end user[2]. As a result of the demolition process, we see the change of market leaders. Disruptive innovations underlie the loss of these positions by market leaders of various products before. Disruptive innovation often brings new infrastructure. As with electric vehicles, the existing infrastructure for the old product may no longer mean anything for the new product. In this case, a destructive effect on the infrastructure occurs. Finally, the new product reveals new consumption habits. The performance criteria that the end user thinks for the old product and the habits he has developed to consume that product may no longer mean anything.

Christensen says that leading companies fail in the face of disruptive innovations, not because they are poorly managed, but because they are well managed. In well-managed companies, the processes used to identify customers’ needs and trends, allocate resources among investment proposals, and launch new products are naturally focused on the market and customers. These processes are designed to weed out product and technology proposals that are not in line with customers’ wishes. But disruptive innovations outperform customer expectations. We have already said that disruptive innovation has also changed the consumption habits of the end user. Therefore, focusing solely on customer expectations is insufficient for disruptive innovations. Four key trends in successful firms’ management practices keep them from recognizing disruptive innovations: listening to customers, turning to technologies that give customers what they demand, and targeting large markets rather than small ones. These are features that are indisputable in the business world. But they are insufficient to deal with disruptive innovations.

market route
Şekil-1: Yeni ve yıkıcı teknolojilerin piyasa rotası [2]

Disruptive innovation is a great opportunity for innovative companies that have the appropriate flexibility and are open to new opportunities. In fact, the fact that innovation is destructive depends a bit on the company that manages it. Companies that follow technological developments, read the market correctly, observe new opportunities, and of course, have a systematic that will establish the appropriate strategy and an innovation system that will turn new technology into a business model can turn innovations that have the potential to be destructive innovations into a weapon. This is how the leading companies in any market today actually started their journey to leadership: Getting the signal and building the right business model!

[1] Christensen Clayton M, 2018, The Innovator’s Dilemma: How New Technologies Are Leading Companies to Failure, Trans.: K. Haktanır 1. b., Istanbul: Koridor Publishing.

[2] Hardman Scott, Robert Steinberger-Wilckens, Dan Van Der Horst, 2013, “Disruptive innovations: The case for hydrogen fuel cells and battery electric vehicles”, International Journal of Hydrogen Energy, C. 38, P. 35, Elsevier Ltd, pp. 15438-51.

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