BUSINESS RESEARCH

Big-Bang Disruptions vs. Conventional Innovation

Big-bang disruptions are a major dilemma for organisational leaders and innovators. They lure away customers in droves in almost every segment (including “underserved” customers or the least profitable ones). And while CEOs are accustomed to shorter product life-cycles and new technologies encroaching on mature markets, big-bang disruptions can wipe out entire product lines in a matter of weeks and months.

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April 2013

Big-bang innovators aren’t necessarily your competitors, nor are they actively seeking ways to better your prices or performance – “they’re just tossing something shiny in the direction of your customers, hoping to attract them to a business that’s…different from yours”. When Jeff Bezos, the founder and CEO of amazon.com, entered the book business, he did so because books were a rational choice – not his expertise. Internet retailing fitted this fragmented market well because of the huge number of SKUs; small, easy-to-ship items; and a stable supply chain.

Big-bang disruptions differ from conventional innovations in three ways:

(1) Strategic Discipline: Conventional wisdom: Focus on a single strategic “discipline” or “generic strategy” – low cost, product innovation, or customer intimacy; Big-bang wisdom: Compete on all three generic strategies simultaneously.

(2) New Product Marketing: Conventional wisdom: Target a small group of early adopters initially, then enter the mainstream market; Big-bang wisdom: Market to all segments of users from the outset. Be prepared to scale-up – and exit – rapidly.

(3) Innovation Method: Conventional wisdom: Look for innovations in lower-cost, feature-deprived technologies that meet the needs of underserved market segments; Big-bang wisdom: Look for innovations in quick-fire, low-cost experimentation on well-known platforms.

To survive Big-Bang disruption: (1) Learn to recognise the warning signs is key to survival; (2) Try to ensure that disrupters can’t make money from their inventions until you’re ready to acquire them or you can win with a product of your own; (3) Prepare for immediate evacuation of current markets and be ready to get rid of once-valuable assets; (4) Diversify - make sure future strategies are built on a platform that can easily be extended and experimented with, and quickly scaled both up and down.

Referenced techniques

Technique

Business Innovation

The concept explores innovation and how it can create and capture value for organisations. It will provide professionals with a basic understanding business innovation.

Technique

Types of Innovations

Innovations may manifest in a variety of forms and are a critical competitive capability of most firms. Case study evidence presented alongside practical implementation steps, assist business leaders to understand how different types of innovation help to build an innovation culture.

Technique

Asset Building to Support Innovation Opportunity

The concept explains how and why organisations should build and position their assets strategically to support innovation opportunities. It describes the types of assets that support innovation - as well as their limitations - and offers useful advice and guidance on implementation strategies.

Technique

Innovation Management

The concept determines the critical factors of innovation management. It reviews the managerial practices of successful innovators and summarises the strengths and limitations of innovative approaches.

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