The definition of these 2 terms is radically different and the type of companies that have good chances to succeed in each of these is…. well, very different as well.
A large and successful company may constantly innovate, better UX, a more efficient product, new cool features, new business models… The typical innovation coming from such companies is focused on advancements of current technology and ways to extract more value from current or similar large markets. They focus on execution of their current strategy. Innovation is all around sustaining what they have already captured and extending it.
One may view it as sequential innovation, small improvements, not leapfrog.
Think Nokia and the feature phone. They hit a home run in that market and constantly improved it but missed the next technology curve. They missed the fact that a few technologies advanced and waited for the first company to recognize that – screens in the right quality and cost, battery capacity, processor capabilities and a community of developers already involved in Web2.0, mashing-up new applications and waiting for the next big thing to jump on.
This type of innovation not only requires looking at the new technology curve but also at markets that are typically ignored by the large companies and analysts.
Think of companies that did HW GPS devices missing the need to shift to SW only/Apps until Waze came along and ate their lunch. Waze attracts the daily commuters and not only people driving to a new location. The daily commuters were first to adopt it.
In the technology area I live in, communications, WebRTC is a good and current example.
The large Telcos, vendors and analyst firms looked at it as a technology that will improve customer service. The new startups looked at the long tail, the many applications that would benefit. Each dot along the long tail line representing a small market. Each market too small for the large companies to look at.
What have they missed?
They missed the fact that communication growth and replacement of current communication may shift from the way they serve communication today to a new way in which it will be served in the future. In-context communication vs. per minute one.
Both sustaining innovation and disruptive innovation are not easy to achieve. Problem is, both are required. Disruptive innovation is harder to achieve because:
- Identifying the next disruptive technology curve is easy in retrospect, hard in real-time
- Companies focus on current business and most find it hard to invest in high risk potential disruption
Next week I’ll be talking more about disruptive innovation. I invite you to register for updates so you don’t miss a post.