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The Modern Marketing Manifesto challenges marketers to be creative and innovative. But how do we as marketers do this.

David Sealey who is completing his MBA disertation on Disruptive Innovation in Retail Markets discusses how marketers can innovate.

The Modern Marketing Manifesto is absolutely spot on. One of the challenges it sets for marketers is to design services and products with innovation and creativity.

I believe that all of us have the imagination to be both creative and innovative within out industry. You don't need to be able to draw to be creative, and you don't need to have the word innovation in your job title to be an innovator.

Four rules to innovate by

Allow me to dispel a myth surrounding Disruptive Innovation: you do not need to work in a start-up to develop Disruptive Innovations.

In fact, recent research has shown that large incumbent firms are just as likely to intoduce Disruptive Innovations as new lean entrants.

My point is that the type of business you're in or its size is irrelevant to achieving the desired outcome. Therefore regardless of your organisation, job description or experience you can drive forward the innovation agenda.

Rule one: know your customers, but more importantly, know those who will never be your customer

Businesses produce a product (which may be a service). Individuals or businesses then consume that product. As time progresses, the business improves the product to enhance it's performance. They make it smaller, cheaper, shinier, faster, more reliable etc. This is called a sustaining innovation.

It's what Apple is currently doing with the iPhone and iPad when it makes it smaller or faster. It's attempting to meet increasing performance demands from its customer base with improvements in the base product.

However as the product performance improves, the low-end of the market remains or becomes left out. They can't afford the latest innovations and so don't purchase at all. Depending on the market this could be a major group. If you can create a product that matches their performance expectation (features, performance and price) then you've disrupted the market by bringing a whole new group of people into it. 

Consider who does not buy what you and your competitors offer? What performance attributes are important to them? What is the minimum set of features they need and how cheaply can this be produced for?

Alternatively, consider a market you're keen to advance in to and examine the same questions in that market.

Rule two: monitor the market

Whilst competitor research is nothing new for marketers, monitoring the innovation radar is somewhat different. 

Firstly you need to identify markets that don't exist where there is a market. By a market I'm referring to a set of business competing in terms of the same performance measures.

To draw on Apple again, the smartphone market is competing around camera megapixels, screen resolution/clarity, price, apps, processor speed, memory. Finding new performance measures that consumers value and then exploiting those measures is a non-market disruptive innovation. 

Secondly monitor start-ups in your supply chain. Specifically watch out for firms that are winning new rounds of funding or being acquired by bigger players. This acquisition of capability represents a shift in the market that you need to be ready for.

Rule three: prototype with emerging technology

Innovations can relate to technology, business models and products. However new technologies increase the likelihood of disruptive innovations in business model or products. Therefore businesses should prototype rapidly with new technologies to see what could be achieved.

The key point with this prototyping is not to expect a massive breakthrough. Do expect a result from it though (new product, faster development time, ability to cut cost).

If that result doesn't come learn from what you did and move on. Failing fast is ok.

Rule four: Innovate with your partners

Upstream and downstream partners can offer major opportunities to find innovations. Talk with them regularly. Be an iconoclast, ready and eager to tear down the way things were normally done to find a simpler or better way. Look for opportunites to co-develop and prototype market ideas. Turn the opportunity to innovate over to your customers. Returning to the Apple analogy; the iPhone's success must be largely attributed to the apps that were developed for it. Apple created a set of partners and gave them the freedom and tools to innovate on their platform.

Recent examples of Disruptive Innovation

I've scanned recent news stories and announcements to find examples of innovations that could one day be disruptive.

An innovation is not simply disruptive by being new or different. To be disruptive it must challnege the prevailing market performance expectations.

ANAR billboard that targets children 

ANAR designed a bill board that changed when viewed at a child's height. A great example of focussing on a different consumer group.

Tata Nano car 

The world's cheapest car. An example of a low-end disruptive product innovation that targets those who couldn't afford cars with a set of performance attributes that the mass market of car buyers would find unappealing.

Adobe Creative Cloud 

Business model innovation from Adobe that allows designers to pay monthly rather than make a large one off capital payment.

Barclays Family Springboard mortgage 

Excellent product innovation from Barclays that introduces a new set of performance measures for an existing product. Parents can invest in their children's property purchase and get their cash back plus interest in a three year period.

Nokia's phones for emerging markets 

Whilst Apple and Samsung are battling it out in the smart phone market Nokia has been beavering away at creating low-end disruptive innovations for emerging markets with cheap handsets that offer incredible battery life.

Amazon Redshift 

A technology innovation from Werner Vogel's team of geniuses at Amazon Web Services. Previously setting up a scalable data warehouse was expensive and time consuming. Now Amazon allow you to fire up a Petabyte scale data warehouse with nothing more than a credit card and a free copy of SQL Workbench.

Dollar Shave Club 

A simple idea that provides razor blades on a subscription basis.

What exactly is a Disruptive Innovation?

Being new or different does not make your innovation disruptive.

To truly be disruptive the innovation must actually be disrupting an existing market. In terms of classical management theory on the matter, this means that the innovation is targetting either low-end consumers in a market or creating new markets for those who previously did not consume in the existing market.

This coincides with the entreprenurial theory that markets are mortal and that to become immortal, firms must shift into new markets or ideally create new markets.

Disruptive Innovations are not necessarily technological. They also include business model, manufacturing and product innovation - although these are often brought to pass by the emergence of new technologies. Certainly this has been the case with Spotify and iTunes who utilised high speed internet and technology innovations to create businesses that disrupted the traditional model of music sales.

Having spent the last few months researching this topic (particualy innovation in the retail market) I feel confident in saying that firms must innovate or be disrupted. Our role as marketers is understand customers and markets and utilise the resources of the business in meeting those needs. 

David Sealey

Published 14 May, 2013 by David Sealey

David Sealey is Head of Digital Consulting at CACI and a contributor to Econsultancy. You can find David on Twitter or LinkedIn

5 more posts from this author

Comments (5)

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skeed

Disruptive innovation is only related to the newer market lower value products or it can be newer market higher value products. Will you please give an example in which the innovator tap the newer market with high priced product, and still be called as disruptive innovator. Or disruptive innovation is only for low end market.

about 3 years ago

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Sandro

An example of a high end disruptive product is FactionBikeCo's 22" wheel BMX. It is aimed at adults, has introduced a new level of performance and has introduced a new wheel and tire size to the bicycle market.
It doesn't cannibalize the existing market but attracts older riders from the MTB scene.

about 3 years ago

David Sealey

David Sealey, Head of Digital Consulting at CACIEnterprise

@Skeed: Check out this diagram to understand the different models of innoavtion:

http://www.thesealeys.co.uk/wp-content/uploads/2013/05/Disruptive-Innovation.png

Low-end disruptions emerge by targeting with low performance expectations
New market disruptions target non consumers such as the example by @Sandro. They target people who wouldn't have purchased a BMX by creating a new performance attribute that those people will value (bigger wheels).

Another example is the iPad. It created an entirely new market by creating a new set of performance attributes.

@Sandro Thanks for the example.

about 3 years ago

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Rick Mueller

David, congrats on selecting the topic of Disruptive Innovation as your thesis topic and good luck and godspeed as you complete your masters degree. While I commend you for looking not jsut outside the box but in an entirely different box (which is where Disruptive Innovation begins) to find the explosive growth opportunities for the future, for the displacement/replacement of incumbents to take place, one must select a box in which the incumbents cannot compete - otherwise you end up just creating a niche and not an entirely new paradigm (which is where you want to be).

In that regard, while the height-responsive billboard is a intriguing, it really is just an improvement on the non-height-responsive billboard. And while Tata is investing in an intelligent competitive strategy by introducing a car to India, the migration from animal-drawn carriage and cartage to one which is motorized is not going to change the nature of the way things are done in India (or China) and more (or differently) than it did in wealthier countries with smaller populations. You'll still get pollution and gridlock and road-building crews, just like anywhere else.

Low-end does not define Disruptive Innvoation (the iPad is/was anything but low-end), it just happened to be a paradoxical characteristic of the Disruptive Innovations that first drew Christensen's attention. And doing something "out of the box" in order to expand the box or make your way into it is also not Disruptive in the meaningful sense of the term, but rather it is starting in a DIFFERENT box which, with further development, has the potential to overwhelm and deplete the support systems (customer, suppliers, investors) of resources needed by incumbents there to survive.

We discuss this all the time at linkedin "dot" com/groups/Disruptive-Innovation-1837479 where you'd be most welcome join and help us evaluate cases of Disruptive Innovation (or not) as they come to our attention.

about 3 years ago

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Liri Andersson

Thank you for your article.

My interest in disruptive innovation spans years back when I was involved with a start up succeeding to disrupt a Sun microsystem solution. I subsequently wrote a business case study around that story for INSEAD, and much of the work we do at the consulting firm i co-founded (this fluid world) is around helping large organisations understand and capitalise on the changes facing them today.

There is often a confusion over whether an innovation is radical or incremental, and I guess this is open for interpretation.

However, I believe that the concept of a disruptive innovation is pretty clear. A disruptive technology is one that, when introduced, either radically transforms markets, creates wholly new markets, or destroys existing markets for other technologies, and so by extension a disruptive innovation is one that, when introduced, either radically transforms markets, creates wholly new markets, or destroys existing markets.

The disruptive innovation debate is important because it would be a shame if we allowed for this term to be loosely used for any relatively new ideas entering the market, as it is an important business concept that should not be taken lightly, especially in these times of change where we are facing prolific disruption. Something organisations must make very seriously, hence why I am making this comment.

Looking at the examples the author mentions, ANAR billboard that targets children, Adobe Creative Cloud , Barclays Family Springboard mortgage, Dollar Shave Club I see clear example of product and business model innovation. What I do not see is an industry that has been disrupted, nor a market, hence what I don't see is a disruptive innovation. Maybe this is because the author separates disruptive innovation from real disruptive innovation, where I believe such distinction does not exist, a technology or innovation is either disruptive or it is not disruptive.

The one example mentioned that I believe had the potential of being disruptive is the Tata nano car. However five years after launch the company has sold just 229,157 Nanos in total in India--and is now considering a move upmarket to encourage sales. Again, I see no disrupted industry or market. If this had been the case Tata would have had to fundamentally change how cars are made, sold and priced in a way that forced the industry to follow suite. In this case however, the appositive seem to have happened.

I am also surprised to read about the research showing that large incumbent firms are just as likely to introduce disruptive innovations as new lean entrants. I do not know the source or the details of the research, but most research to date shows that issues such as myopia, legacy, risk aversion etc makes it hard for any large organisation to innovate, and by that rational even harder to disrupt.
However, my initial thoughts (caveat I have not seen the research referred to) is that we may face a semantic issue here 1) how does this research define disruptive innovation and 2) introducing disruptive innovations is not the dame as actually developing them i.e large organisations can acquire the innovation or achieve it through collaboration, this does not mean the developed the innovation.

A have written more on this subject in the Amazon’s Kindle Fire is not a disruptive Innovation (I ask the reader to bare in mind that Jobs was still with us when it was written influencing my opinion of the future of Apple). http://www.liriandersson.com/amazons-kindle-fire-is-not-a-disruptive-innovation/

Again thanks for your piece and would love to know more about your thesis.

almost 3 years ago

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