Weekly Business Insights from Top Ten Business Magazines | Week 293 | Shaping | 2

Extractive summaries of and key takeaways from the articles curated from TOP TEN BUSINESS MAGAZINES to promote informed business decision-making | Week 293 | April 21-27, 2023

Innovation Doesn’t Have to Be Disruptive

By W. Chan Kim and Renée Mauborgne | Harvard Business Review Magazine | May–June 2023 Issue

Listen to the Extractive Summary of the Article

For the past 20 years “disruption” has been a leading battle cry in business.  Corporate leaders have continually been told that the only way to innovate and grow is to disrupt their industries or even their own companies. Not surprisingly, many have come to see “disruption” as a near-synonym for “innovation.”

But the obsession with disruption obscures an important truth: Market-creating innovation isn’t always disruptive. Disruption may be what people talk about. It’s certainly important, and it’s all around us. But as the authors’ research reveals, it’s only one end of what we think of as the spectrum of market-creating innovation. On the other end is what the authors call nondisruptive creation, through which new industries, new jobs, and profitable growth come into being without destroying existing companies or jobs.

Under disruption and its conceptual antecedent, Joseph Schumpeter’s “creative destruction,” market creation is inextricably linked to destruction or displacement. But nondisruptive creation breaks that link. It reveals an immense potential to establish markets where none existed before and, in doing so, to foster economic growth in a way that enables business and society to thrive together.

Women’s sanitary napkins, microfinance, and the television program Sesame Street – all such rise to a new industry that for the most part had not existed before – examples of nondisruptive creation.  All those have created or are creating new multibillion-dollar industries, growth, and employment, without displacing any existing markets, players, or jobs.

Three fundamental characteristics of nondisruptive creation. First, it can occur with either new or existing technology, without any such innovation, or with a new combination or application of existing technology.  Second, nondisruptive creation is applicable across geographic areas, from developed markets to bottom-of-the-pyramid markets, and at all levels of socioeconomic standing.  Third, nondisruptive creation can be new-to-the-world innovation, but the two are not equivalent.

In theory, disruption should generate higher growth and new jobs, but painful adjustment costs exist in the short run.  The impact of nondisruptive creation can be distinguished from that of disruption at three levels. The micro level focuses on individual organizations, the meso level on groups or their interactions, and the macro level on the economy or society.

Three building blocks are key to nondisruptive creation: identifying a nondisruptive opportunity, finding a way to unlock it, and securing the enablers needed to realize it in a high-value, low-cost way.   The relevant questions, to begin with, are: What taken-for-granted problems that no industry exists to solve do you or your company observe or directly experience? What newly emerging issues are you or your organization encountering that have no industry addressing them and could create a real opportunity for you, your business, or the world? Are you actively scouting brand-new problems to solve and brand-new opportunities for creation? Do you have a mechanism, a process, or tools for doing so effectively?

3 key takeaways from the article

1. For the past 20 years “disruption” has been a leading battle cry in business.  Corporate leaders have continually been told that the only way to innovate and grow is to disrupt their industries or even their own companies.
2. But the obsession with disruption obscures an important truth: Market-creating innovation isn’t always disruptive. Nondisruptive creation, through which new industries, new jobs, and profitable growth come into being without destroying existing companies or jobs.
3. Three building blocks are key to nondisruptive creation: identifying a nondisruptive opportunity, finding a way to unlock it, and securing the enablers needed to realize it in a high-value, low-cost way.

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Topics:  Disruption, Jobs, Economies, Technology