Disruptive innovation or a pathway to strategic sustainability (part 1)

I’ve been reading a lot lately. My everyday job is change. I need to tell people that what they’ve been doing for the past 20, 30 , 40 years is just not enough anymore… But how can I do that without offending them? (yes I know, politeness, Socrate’s approach of asking questions, etc… but that’s not the point of this post)

The real question is how do I bring "change" to become the next status quo? A paradox you say? Well… kinda, but the idea is there. So I’ve been, reading about change, innovation, continuous improvement, creativity, business developpement and obviously sustainability and CSR. You can read my twitter feed (@simon_robert) if you’re interested. 

That’s how I found the concept of "disruptive innovation". Here are the basics:

Here’s what Wikipedia says:

A disruptive technology or disruptive innovation is an innovation that disrupts an existing market. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically by lowering price or designing for a different set of consumers.

In contrast to "disruptive" innovation, a "sustaining" innovation does not have an effect on existing markets. Sustaining innovations may be either "discontinuous"[1] (i.e. "transformational") or "continuous" (i.e. "evolutionary"). Transformational innovations are not always disruptive. Although the automobile was a transformational innovation, it was not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles. The market for transportation essentially remained intact until the debut of the lower priced Ford Model T in 1908 by making higher speed, motorized transportation available to the masses.[2]

The "founder" of this terms describes it as such on his website:

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. 

Here’s my point: sustainability is to management what the digital camera was to traditionnal films. What we are living, in the management world, is disruptive innovation on a large scale and at a fundamental level.

Here is a quote from a Thesis on the subject by Christian G. Sandström (2010):

Disruptive innovation can therefore be regarded as a business model challenge in the sense that the new value creation and distribution distorts the firm’s surrounding constellation of actors. Firms need to change their network, but struggle to do so since business models transcend their boundaries and they are therefore forced to act under conditions of interdependence.

Sandström also states that organizations must be regarded as open systems. Here is a bit more from this thesis:

Weill and Vitale (2001) argued that there are three important dimensions of a business model: the participants, the relationships and the flows that connect these participants. Other scholars have also pointed out the boundary spanning nature of business models and that this concept addresses how and why value is created and distributed in a network (Akkermans, 2001). Based on the above, it can be concluded that business models are generally concerned with how firms create and appropriate value by interacting with their environment. Hence, value and networks can be thought of as two important components of the business model concept. These two notions are therefore briefly described in the coming two sub-sections.

It is argued that too much focus has been put on performance dimensions rather than value and utility.

If you’re a sustainability "nerd" like myself, I strongly urge you to read this thesis since it talks a lot about change management and the fact that some strategies can be "competence-destroying" and thus increases the resistance from some sectors or employees. Furthermore, it enlarges the boundaries of the organisation to encompass outside stakeholders.

I’ll probably write more on the subject this summer.

 

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One response to “Disruptive innovation or a pathway to strategic sustainability (part 1)

  • The quest for value creation « Simon Robert

    [...] I’ve often been asked to share my thoughts on the strategic management of sustainability initiatives. Before presenting the many amazing tools that can be used to do so, I take the time to explain the paradigm shift in management. Historically, enterprises where managed as black boxes in which you would inject an input, money, and through transformation, you would get outputs, usually more money and, oftentimes, a lot of refuse. Nowadays, enterprises should be though of as living entities trying to survive in a complicated environment. Thus managers need to know their environment to grow, to protect themselves and to improve on their environment so their output, still money, grows on a long term basis. You can also read my post on disruptive innovation. [...]

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