Disruptive innovation, a term of art coined by Clayton Christensen, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.
As companies tend to innovate faster than their customers’ needs evolve, most organizations eventually end up producing products or services that are actually too sophisticated, too expensive, and too complicated for many customers in their market.
Companies pursue these “sustaining innovations” at the higher tiers of their markets because this is what has historically helped them succeed: by charging the highest prices to their most demanding and sophisticated customers at the top of the market, companies will achieve the greatest profitability.
However, by doing so, companies unwittingly open the door to “disruptive innovations” at the bottom of the market. An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.
Characteristics of disruptive businesses, at least in their initial stages, can include: lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics. Because these lower tiers of the market offer lower gross margins, they are unattractive to other firms moving upward in the market, creating space at the bottom of the market for new disruptive competitors to emerge.
Ryan Raffaelli, of Harvard Business School, has examined examples of “re-emergent technologies” in detail. The most striking example is the Swiss mechanical-watch industry. In the 1970s it was almost washed away by a tide of cheaper and more accurate digital watches. Today the industry is more successful than ever, providing the country’s largest source of exports after pharmaceuticals and machinery, and the engine of its revival is the old-fashioned wind-up watch.
There are plenty of other examples of re-emergent technologies. Sales of fountain pens collapsed in the 1950s with the arrival of cheap ballpoints; since the mid-1970s they have enjoyed a steady revival. Trams looked destined to become nothing more than tourist attractions in proudly quaint cities such as San Francisco and Paris. But hundreds of cities in the world have either installed new tram systems or have plans to do so. Sales of vinyl LPs in the world have increased from almost nothing in 1993 to more than some millions in 2013. The number of independent bookshops is rising for the first time in decades.
How do businesses go about reviving old technologies in the face of so much innovation? Mr Raffaelli argues that the key to success lies in redefining the product’s value and meaning. Swiss watchmakers redefined their products as status goods rather than a means of telling the time. That they are so much harder to make than digital watches added immeasurably to their desirability. Independent booksellers are redefining themselves as communities where people who care about books meet and socialise. Trams are re-emerging as a green solution to both pollution and urban sprawl: a striking number of the cities that are adopting them are formless sunbelt cities.
This redefinition demands a careful balance between tradition and change. Revival businesses often need to cultivate a close relationship with their craftsmen and customers, who may see themselves as guardians of a great tradition rather than mere employees or consumers. The Swiss watch industry arguably survived only because collectors kept paying record prices for watches at auctions and skilled craftsmen refused to abandon the old ways: when Zenith decided to throw away its mechanical watchmaking moulds at the height of what Swiss refer to as “the quartz crisis”, one old-timer decided to store them in a shed instead, wheeling them out once again when the luxury market took off. Revival businesses need to peddle their back-story remorselessly.
However, while peddling their traditions and reassuring customers and craftsmen that they are holding true to them, revival businesses also need to be willing to change. Nicolas Hayek and Ernst Thomke saved the Swiss watch industry from impending death by applying a succession of electric shocks. In a series of deals they brought together a bunch of ailing businesses into the mighty Swatch Group, whose sales last year reached SFr8.8 billion ($9.5 billion). They fought back against cheap digital watches by first redefining Swiss watches as fashion items, with Swatches, and then redefining them as luxury items, with brands such as Breguet, Blancpain and Omega which sell watches for six-figure sums.
Revival industries need to be willing to take tough decisions: for example, sacrificing market share to new entrants while holding firm on price. They also have to be ready to reorientate themselves to new markets: the Chinese have proved enthusiastic buyers of Western heritage goods.
Elon Musk is the CEO of SpaceX and Tesla. In these two companies, products manufactured have never been proposed before. For SpaceX (USA), the company is able to sell a rocket launch for satellites for 12000 dollars / kg as cost for Ariane 5 (Europa) is 23000 dollars / kg and for Proton (Russia), 18000 dollars / kg.
As ILIAD for French Telecommunication, SpaceX is completely redefining the market of space rocket launch. He obliges restructuring Safran (Ariane) into Airbus group in June 2014.
Elon Musk is also the CEO of Telsa, a company selling only electric cars in USA! Elon Musk is a serial creator, as he was the creator of Paypal sold to Ebay in the 2000’s years.
“If a company depends on its patents is that it does not innovate or when it does not innovate fast enough.” It is with these words Elon Musk justifies his last “madness” make patents Tesla, the electric car manufacturer, accessible to all. And therefore its competitors, now free to take the technologies that have made the success of the models of the Californian company.
“Technological leadership is not defined by patents, history has shown repeatedly that they represented only a small protection against rival determined continued Mr. Musk. Rather, it is defined by the ability to company to attract and motivate the most talented engineers. “And therefore the ability to constantly innovate. “You want to innovate much faster than your previous patents lapse,” says Mr. Musk. It is demonstrated by the success of SpaceX, his second company, specializing in space launch and has only a limited number of patents.
Tesla web site: http://www.teslamotors.com
SpaceX web site: http://www.spacex.com
In the near future, we may be wondering what makes us different from all these machines that can now combine power, knowledge, rapidity and some sort of intelligence of their own, some sort of experience, to work instead of us. If they can find the right words for the right events, analysing everything we say and the way we share it, if they can go up to create algorithms that can reflect feelings and emotions, what will make our work different from theirs? A question Jeremy Garner analysed in this article in Business Insider.
Here’s a few reasons shared on WAI social networks which show there are a few yet most important core reasons why we make better innovators than robots and machines. They are so much worth reminding the obvious.
Something about hope
These two young women have discovered a bacteria that could break down plastic and reduce…
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This is incredible to see how Google progressed within 1 year about their program “Google self-driving car project”. This is now not anymore, a concept with technical tests using a Toyota cars, as it was last year, with Prius or Lexus RX; this is not anymore a technical solution with engineers embedded in these cars, checking the issues of the software developed.
This concept allows Google to propose a completely automatized car without any steering wheel nor any pedals of acceleration or brake nor any engineer embedded in the car.
A new model of usage born
These cars will not be sold by Google; the cost of cars remains too expensive from now; some rumors speaks about a price of 1 million of dollars for the first Google cars, if we integrate manufacturing costs and R&D costs included; and the running costs of these cars is unknown for the moment; for sure, limited people could buy these cars if they would be allowed to buy them.
These cars will be firstly rented by Google to replace your car to go to supermarket, to go to airport or to go some meetings in your town. This model reinvent the usage of transports.
On one side, this car can be compared to a public transport, completely optimized: the car is able to take you everywhere; and you can go everywhere; this car is a two places car, it doesn’t take a lot of place in the road circulation and you don’t need to park them; the car is able to know the traffic jam and optimize the way to go to the destination.
On the other side, this car can manage all small “travel” corresponding to 80% if car usages. This is a complete revolution for the car manufacturers in the next 10 years; in this case, people will not buy anymore a car; what is the interest if you can “call” a car when you need it?
Of course, it means that there will be enough “automatized” cars available in one place as big towns. This is also a complete revolution for taxi or public transports: this automatized transport can be very competitive in the next 10 years and completely change the model of transports in big town.
Continuous disruptive model as Business model
This revolution is exiting because Google, a “big” company with 50000 employees and 60 billions of turnover, is able to make some disruptive innovations on many different sectors every year!
Generally, companies are able to make one disruptive innovation every 10 years; and when it is more, a big risk of failure of the company can be predicted. In the case of Google, it seems not; their Business model seems to be constructed on their capacity to continuously be able to build some disruptive concepts with a lot of synergies with existing profitable activities they also manage.
A lesson to be learn by many worldwide companies if they would continue to exist in the next decades.
Four colors pen is too nerdy? Go Scribble and 16 million shades!
What unleash your imagination!
This is a true innovation offers us an American company: the first pen connected. Scribble can take any color and reproduce on paper. This little gem of technology has a color sensor 16-bit RGB, an ARM 9 processor and an internal memory of 1 GB Add the Bluetooth 4.0 and micro-USB port for charging and you get a pen 2.0 tune with the times.
Usage is childish!
Place the sensor on the color you want to remove and press the button! The unit is responsible for storing the color. Thanks to its memory, can store up Scribble 100,000 colors. With its ink cartridge and mixing chamber, the pen offers an exact reproduction of the sampled color.
The Scribble will be offered in two versions, one ink (U.S. $ 149.95), the other version stylus (U.S. $ 79.95). The release date is not yet disclosed, but the company website offers users (in exchange for an email address) to warn when the pen will be available for sale.
See more details: http://getscribblepen.com/blog/
The medium-sized companies are becoming fashionable. Helping the crisis, their long-term vision has transformed these organizations ideal company. They are called innovative but ultimately knows how badly it is organized in this area. Analysis.
Do you know the “Global Niche players”? These businesses, often family, who managed to impose itself on the world market by cultivating excellence in a very specific area. This category is called the Mittelstand in Germany or ETI (midsize) in France, all show a system very similar values. They cultivate the art of long-term independence (including financial), love of work well done and are very attached to the mastery of skills (they prefer when it is “homemade”).
These “guidelines” have clearly shaped the culture of innovation in these companies. Several things make it unique compared to large groups. Highly specialized, these companies focus, for example, their efforts in R & D technology and a single. This feature could be deadly but instead stimulates the creativity of the teams. These last are always looking for new uses, new developments to expand the scope of the technology.
Develop performance for the customer
Management “good father” of these companies also impacts the way we consider the return on investment in innovation. Financing capacity is limited, ensure all develop applications more than concepts. SNF, a polymer specialist based in Saint-Étienne (France) providing chemical solutions including hydraulic fracturing, this “constraint” requires chemists to house state of the art scientific literature before making their new polymer and complete the project in six months to prove the concept.
This very applied creativity also requires businesses to include the end user of their product very early in the design. The goal is not to co-develop but to understand what competitive advantages they expect the products they sell them. Rational, a German manufacturer of kitchen equipment group, sells its customers ovens and cooking systems but places great emphasis on saving space that allows for innovation in the kitchen.
Innovation and research have allowed the Barilla Group, owner of Harrys, resist own brands on the shelves.
For the third time in ten years, the Barilla Group (Italy), owner of Harrys brand, expanding its specialized in bread without crust factory located near Lyon (France). Guido Barilla, chairman of the Italian group, came in person to launch the production line on June 4. This investment of € 14 million will enable the brand leader of bread in France, producing 24 million packages per year of what has become the fastest growing segment of the market: “100% crumb” whose sales rose 15% last year. “Whenever we have increased our production capacity we quickly saturated,” says Giovanni Palopoli, director of operations for Barilla Western Europe.
The story is like a fairy tale business. In 2005, when redeemed Harrys Barilla brand, created in 1960 by a baker from Châteauroux (Indre, France), the idea of bread without crust was like a joke. A bit like Emmental without holes. But the Italian really believed, because “this was already a success in the Spanish market,” says Miloud Benaouda, CEO of Barilla France. Better, it could allow the brand to take advantage of packaged breads sold under white labels and low price, which nibbled the French market.
Remained in control in manufacturing, because this seemingly innocuous innovation required technical prowess. Indeed, once removed the crust, bread, less rigid, it becomes difficult to decide on the production line. Hence the idea – protected by a patent – to reduce sharply the temperature of the bread after it leaves the oven to stiffen, to better decide.
Success was quick, worn by children, used to cut the strip of fat around the ham or remove the rind before eating. The bread seemed designed for them, and television campaigns, putting children on stage, was confirmed. The brand also invests heavily in communication: it generates for 80% of advertising spending in its market.
Harrys did not stay alone for long in this segment is booming. Jacquet (Limagrain Group, France) has released its free crust, called “Bloody Mie”, which uses a different method of manufacture. “This is a unique process, says does one competitor in the Harrys, without removing the crust and thus without waste. Patent of this invention is applied globally. Helps reduce material losses and the first cooking time. ” The challenger uses a steaming which avoids the formation of a brown crust. For connoisseurs, the “Bloody Mie” Jacquet has a white crust well and can not be considered without a crust. Difficult to decide.
To keep ahead in the race for innovation, Harrys under-segmented bread without crust market by launching the 100% brioche bread, wholemeal bread, bread pudding, 7-grain, long shelf … A fee activism: industrial holds its competitors and white labels at a distance and keep the consumer preference. While the French market classical sandwich bread rose by only 2.4% and is dominated by white labels (44.5%), that of “no crust” grew 15% in volume in twelve months, and Harrys dominates, with nearly 60% of sales.
Corporate world companies are still very much a boy’s club. Look inside the corner offices of Fortune 500 companies, and you’ll find just 24 women–a paltry 4.8%–sitting at the CEO desk. Those who are tapped are often brought in during times of crisis.
Clinical psychologists Susanne Bruckmüller and Nyla Branscombe conducted the 2010 study “The Glass Cliff: When and Why Women are Selected as Leaders in Crisis Contexts,” and found that women are tapped not because female characteristics are valued, but because the stereotypical male traits, such as being competitive and uncompromising, aren’t perceived as being helpful during a turnaround.
Does the glass cliff set up women for failure? Not necessarily, says Kira Makagon, executive vice president of innovation at RingCentral, a cloud-based phone provider. In fact, she looks at the opportunity as a chance to shine.
“Women need to stretch their experience from a functional background to a broader base,” she says. Once in leadership positions, Makagon and Miller say women need to be proactive to stay there. They offer five things women can do to survive the glass cliff:
1. Focus on what you want to achieve.
To move ahead, Makagon says to leave gender aside and focus on your professional strengths.
“In a predominantly male environment, women will be treated differently,” she says. “For example, if there is one chair in the room, it will probably be offered to you. But don’t dwell on the differences. Everyone is judged by their results.”
2. Network and find a mentor.
You can’t move up on your own, says Miller, author of Sleep Your Way to the Top: And Other Myths About Business Success (FG Press, 2014). “It’s vital to have others support you,” she says. “I made the biggest leap at Frito-Lay because I had a mentor who supported me and let everyone know how amazing I was. That catapulted my career.”
Miller says to make sure you’re always networking and building alliances. “You never know who could help you–a boss, peer, or underling,” she says. “People wanted to work for me and that’s how I got to senior management.”
3. Be comfortable with yourself.
Don’t try to change who you are to fit into a man’s world, says Makagon; it will be disingenuous. “In the typical old boys’ club, you’re going to hear men discussing sports,” she says. “I don’t follow teams, and I can’t participate in that conversation. Instead of changing who I am, I change the subject. I’ll ask, ‘Who’s seen what’s playing at opera house?’ Often, they look at me with that deer-in-the-headlights look, but it changes the landscape and puts you in the center.”
While you shouldn’t become someone you’re not, Makagon adds that sometimes it’s important to go with the flow.
“I was invited to a meeting at a cigar bar with the guys,” she says. “I didn’t smoke, but I did go along for the experience. Recognize that you’ll probably be the only woman there, and get comfortable being out of your element.”
4. Pay attention to your leadership style.
This is where women get derailed, says Miller. “Women are often stereotyped,” she says. “We can be accused of being (called) emotional when we may just be passionate, but it’s important not to let your personal style get in the way of being heard.”
Listen to the cues of others. While you don’t need to become someone else to succeed, Miller says you need to realize the most senior person in the room dictates the mood, pace, and atmosphere.
“To be successful, you have to understand that person and flex your style accordingly,” she says. Lead with the facts and listen to the corporate culture. “Once I changed my interactions with senior management and listened more carefully to their language, I suddenly was being heard.”
5. Recognize other women.
Makagon says when you climb the corporate ladder, it’s important to reach out to other women along the way.