The CRL is an Indicator (2) developed by the U.S. Department of Energy's Advanced Research Projects Agency (ARPA-E). It helps to do a Commercial assessment to determine how ready an idea is to take to market. Therefore, enables key barriers to be addressed to support the commercialization of a technology (1). Originally created for solutions in the Cleantech industry, its use can be trespass to other verticals.
New approaches are the European observatory of research and innovation in the field of Cybersecurity and Privacy (6) The New York State of Opportunity (NYSERDA) uses a template for complete an assessment and can be downloaded here.
It is a type of Innovation that focuses on creating a new-to-the-world product (e.g. radio, car, mobile phones, and personal computers). Radical Product Innovations are disruptive to consumers because disturbed prevailing consumer habits with new products and value propositions. Also, are disruptive to producers, because punched competences and assets where they built their success. This type of Innovation is not driven by demand, but for a supply-push process boosted by the new technology developers (Markides and Geroski, 2005).
Characteristics
New-to-the-world founders are rarely the ones who scale the business from their little niches. Usually, new followers take off their lead in the market.
Radical Product Innovation leaders, time their entry to markets and undertakes hard work such as making heavy investments for scale economies, building strong brands and controlling channels distribution (Markides, 2006).
The Radical Product Innovation has the same scaling-up process made by the Disruptive Innovation, shared by Christensen (1997). Indeed different examples (Honda motorcycles, canon copiers, and Seiko watches) referred (Christensen & Raynor, 2003) are Radical Product Innovations.
How to compete?
Although mentioned above, if incumbents companies want to achieve Radical Product Innovation's advantage, might not follow up the strategy that described Christensen et al. Unlike, they can do what they are good at - consolidating young markets into big, mass markets (Markides & Geroski, 2005).
Other option, business incumbents can change quality and price, while improving the quality of the product to make it acceptable to the average consumer; or can create a network of feeder young entrepreneurial firms: or can invest in equity stakes to later support them at the moment of consolidate a mass market (Markides, 2006).
The Radical Product Innovation has a different product performance as Business-Model Innovation, although both types have a scaling-up process, therefore, the strategy to compete must be different for managers.
What type of Product Innovations am I talking about?
Here I share an interview where I'm talking about different products made by different scientific to reduce the effects of frost and cold in high Andean areas. Are these products Radical Product Innovation type? Are they Disruptive Innovation?
Markides, C. (2006; 23:19-25). Disruptive Innovation: In need of Better theory? The Journal of Product Innovation Management.
Markides, C. and Geroski, P. (2005). Fast Second: How Smart Companies Bypass Radical Innovation to Enter and Dominate New Markets. San Francisco: Jossey-Bass.
Christensen, C. & Raynor, M. (2003). The Innovator’s Solution: Creating and Sustaining Successful Growth. Boston: Harvard Business School Press.
Christensen, C. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston: Harvard Business School Press.
It is a type of innovation and happens when an organization discovers a different business model in an existing business. To be recognized as such, it should (1) Enlarge an existing economic pie - by attracting new customers in a market or by encouraging customers to consume more (Markides, 2006). - {Rolando: can't be by taking off customers from other competitors? Could be, but must be providing something new in a different way} and (2) Require different value-chains.
Characteristics:
Business-Model Innovation redefines what a product is and how it is provided, it is not used to build new products or services. E.g. Amazon never discover the bookselling business, rather redefines it and how it is provided.
Business-Model Innovation attends new "success factors" overlooked, changing the product's attributes used by traditional business incumbents.
Business-Model Innovation requires a different structure of their "business model" to attend new customers, even incompatible with business incumbents. E.g. If KLM sells its tickets on the internet like Easy Jet (low-cost), risks its existing distributors, their traditional service and travel agents.
Equally to the Disruptive Innovation or Radical Product Innovation, New Business-Model Innovations offers a specific product performance that established customers start to switch to the new product offered.
How to compete?
Business-Model Innovation doesn't dominate a market according to evidence (e.g. internet banking) and literature (Markides, 2006), therefore it is not necessary to create a new company as Christensen said (Christensen, 1997). In fact, it is found that usually this type allows emerging fast to a certain percent of the market but fails to overtake it. So, incumbent companies can compete by using "Disrupt the disruptors" strategy, invest in adjacent markets or taking its business-model internationally.
Discussion
The way how Business-Model Innovation emerges from a low-performance market to a mainstream market is similar to the process of how Disruptive Innovation happens. This may explain how the term could be managed as the same, but a clear thing should be noted, Disruptive Innovation assume a total market overtook and "New Business-Model Innovation" don't. So, market impact's patron may be the difference?!
Markides, C. (2006; 23:19-25). Disruptive Innovation: In need of Better theory? The Journal of Product Innovation Management. Christensen, C. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Boston: Harvard Business School Press.
You may hear when someone ask you for a "disruptive innovation"...well, no worry, here you will find a resume of what is and how to find disruptive innovations for your company or ideas. Just keep calm and read about Disruptive innovation here:
History!
Disruptive Innovation is a theory with core concepts and within the last 20 years has been made essential refinements. First of all, it is a "type of innovation" that creates a new market and a new value network, that disrupt the current status quo. It was first introduced by Clayton M. Christensen in early 1995 with colleagues, and discuss the term further in his book The Innovator's Dilemma (1997). Later on, he replaced the term "disruptive technology" with "disruptive innovation" because finds that is the business model influence by technology that enables disruptive impact.
When Disruption happened?
Imagine successful Large Businesses with a product offered to "Mainstream customer" and "Most profitable customers" - but not to "Least profitable customers". On the other hand, a startup, with fewer resources and their own product targeting the "Least profitable customers" (or new market) with a more-suitable functionality at a lower price. Large businesses don't react aggressively as they are chasing "Most profitable customers". But then, Disruption happens! The startup moves to upmarket, attending in volume the requirements of Large Businesses' "Mainstream customer."
So, Disruption is...
It is a process when small business knock out large business by taking off their main customers and within a product performance that starts from the low market (or a new one) to the most complex"
The Disruptive Innovation Model
Disruptive Innovation is a process (3), and can be explained in a model below. Happens when Entrant's (Startup) product performance trajectory with fewer resources target Least profitable segments (or new markets), neglected by Business incumbents (Large business), then other mainstream segments, until catches Business incumbent's mainstream customer with a more-suitable (answering the quality expected(2)) and with a cheaper product.
Graphic: The Disruptive Innovation Model
Source: "What is disruptive innovation?" (Clayton, M et al; 2015)
Key facts
Is only possible when they get started in Low-end footholds offering "good enough" products, or when starts with new-market footholds where none market existed. They turn "nonconsumers" in "consumers". (e.g.: In late 70s new challengers introduced personal copiers when usually only were copiers for large corporations)
It happens when quality catches up with mainstream customers, no before. Customers do not like their products not because is less expensive but because they wait until its quality rise enough to satisfy them.
Disruption is a process, and not a fixed point.
Disrupters often (? - what is the source) build business models that are very different from those incumbents.
Some disruptive innovation succeeds, some don't.
Usually, companies practice "sustaining innovation", and this not necessarily means disruptive innovation. A better resolution tv, a new go-pro camera are some examples.
Evolves from the fringe to the mainstream, targetting the overlooked segments and gaining a foothold by delivering more-suitable functionality - usually at a lower price.
Disruptive technological Innovation eventually grow to dominate the market (Christensen, 2003)
So....how to do a Disruption?
By using a new or innovative technology that enables to deliver better products to overlooked customers (2). (Or perhaps as it is a process, it should be done by taking the accurate product performance trajectory until match large businesses' customers) What is my opinion about the model?
The term "Disruptive innovation" seeded an unclear understanding by both academy and managers. Also, have not connected with other types of innovation as "Business-model innovation" and "Product Innovation" generating a gap of how they interact. Indeed these type have different competitive effects, produce different kinds of markets (Constantinos, 2006) and represents different challenges for business incumbents. I would say that rather than a "type of innovation" based on a technology change or "business model change" it is a type of Innovation focus in the product performance trajectory over time.
On the other hand, start selling in the low market side, get the same customers from large business or democratize a product are singular characteristics that do not set a Disruptive Innovation. In addition, it is not mentioned if the technology used for disruptive innovation must achieve a cheaper cost or not. It is mentioned as a character but with not any sure assumption. Finally, rather than new technologies, could be also new Business models?
Do the quiz!
So, if we understand all above we can answer the following questions:
Did Uber apply Disruptive Innovation? no, they don't apply fact 1, nor fact 2.
Did Netflix? yes, they foothold in the low-end market and then they upmarket.
Did Tesla? no, they foothold in the high end of the auto market. Missin fact 1 and 2 listed above.
Did Tambo? no, it is a sustaining innovation
Did Kola Real? no, it is a sustaining innovation
Did new cars? no, they were expensive luxury items that didn't disrupt the market for horse-drawn vehicles. However, the mass production of low-priced Ford Model T (1908) was a disruptive innovation (fact 1)
In this interview, I talk about some technological projects that (in my opinion) are disruptive innovations to respond to the threat of diseases caused by cold and frost in high Andean areas of Peru.
Sources:
(1) Christensen, C; Raynor, M; McDonald, R. (2015). What is disrupting innovation? Harvard Business Review.
(2) Rosamond Hutt (2016). What is Disruptive Innovation? World Economic Forum.
(3) Constantinos, M. (2006; 23:19-25). Disruptive Innovation: In need of Better theory? The Journal of Product Innovation Management.
(4) Christensen, C. and Raynor, M. (2003). The Innovator's Solution: Creating a sustaining successful growth. Harvard Business School Press.
Some concepts: 1. Business incumbents: predominant business in the market; 2. Mainstream customers: most important clients.
It sounds elusive, but the reality is simpler. When organizations (whether a big transnational company or a fast & bold startup) need to manage innovative products or services to achieve more value, they required leaders. These leaders have a role & can be found in different dimensions as was found by the PDMA Body of knowledge (2017):
Strategy:
The Corporate Executive (CE) team, plus Senior representatives of key functions, and together with the Board of Directors (BD) - chosen by shareholders - set the overall corporate vision and mission.
Graphic 1: BCP Bank
Information: The Peruvian Bank defines their corporate vision, mission & values (where "innovation" is a declaration) with their CE and BD.
The Senior executive team member of a business unit and the Executive team of a specific business unit developed the Business strategy.
Graphic 2: Movistar
Inf: Movistar, one of the main Telecom companies in Peru defines the Business strategy of new products with the leadership of the Senior executive team member (Director of Innovation and Marketing) adn Product's executive team
The Functional head and a Senior team from the specific functional area developed the Functional strategies.
Graphic 3: Banco de la Nación
Information: The Peruvian National Bank (Banco de la Nación), has a Functional and a SubFunctional manager for the Technology Department - who are responsible for the Innovative Technology efforts within the Bank.
The Senior product manager (e.g. Senior VP Product Management, Chief Product Officer or Group Product Manager) developed the Product Strategy.
The Senior executive member, VP of Innovation, Chief Technology Officer or Chief Executive Officer in company with their cross-functional team of senior managers developed the Innovation Strategy.
Graphic 4: AJE Group
Information: AJE Group, a Peruvian manufacturing company has a senior executive in charge of Innovation who coordinates with 20 countries.
Process:
The Process champion establishes the PDP (Product Development Process) and the ongoing training in its understanding.
The Process owner is the manager responsible for the PDP's strategic results.
The Process manager is the responsible for the order and timely flow of ideas.
The Project manager is responsible for specific projects within the PDP. Also known as product development project manager, and in an agile process, this lies to a product owner and scrum master.
Organization:
The Most senior manager (e.g. Chief executive) promotes a positive climate - together with their senior executive managers.
Case practice: When PwC (2015) compromises to insert the "Innovation" culture within their organization, it was possible because the most senior manager was convinced and encourage other executives manager to approach it.
Functional managers and Individual team members or project managers promote the positive climate.
Once the senior management set the roots for a new positive climate, functional managers and individual teams made possible the innovation by accepting and evangelizing it in their daily day.
Team development is in charge of the senior product development manager
Product:
The Product manager ensures the product(s) meet market needs by monitoring marketing mix, ensuring alignment with product development strategy, and promoting inter-functional coordination.
If you want to share How is working in your company or have any comment don't hesitate to write me! Let's keep innovation working!
