November 20, 2011 § Leave a comment
A personal review of an article titled – Disruptive Innovation for Social Change.
In 140 Characters
Disruptive solutions (ones that are simple, convenient and cheap) are sufficient to address big problems both in private and social sector.
What are Disruptive Innovations
Disrupting innovations as the name suggests are innovations that disrupt or create a dent in the market via products, services, etc. Normally it is via simpler solutions that have been overlooked previously. Or taking advantage of emerging consumer needs. It may not offer all the features/benefits of the current practice. But, they are convenient, cheaper and simpler. This makes disruptive innovations appealing. An example quoted in the HBR is that, South-West Airlines did not offer in-flight refreshments and their initial target market was leisure travelers who did not want to pay huge ticket costs. So, basically the services offered by South-West Airlines were a subset of what was available for air-travelers before their launch. But, they were successful!!
Why incumbents do not score a Home run on Innovation
Incumbent firms, in most cases, never come up with/implement disruptive innovations. This is true in a high number cases and the author makes a very good point on the why part. An incumbent firms’ resources are tailor made to suit their survival. So, pursuing a break-through innovation means neglecting its existing investments. In other words, incumbents choose continued usability of their resources over market/customer needs. This ultimately leads to the demise of incumbent firms.
Simpler solutions unlock new markets
There are several examples of organizations doing this kind of innovation, but most noted and easy to grasp is Micro-lending by Grameen Bank. Another one was brought about by Arvind’ eye hospitals in India. The eye hospital manufactured their own lens at $10 per piece instead of using the ridiculously expensive $140 per piece. More on that can be read here.
Catalytic Innovations and How to identify them
When Disruptive Innovations are applied to Social Sector, they go by the term Catalytic Innovations. As per the HBR piece, few signs could be used to identify such innovations, 1. Whether a new firm is offering low-cost, but high-convenient product/service, 2. Solution sustainability & scalability across geographical regions.
That’s pretty much what I got! 🙂 Anyone, feel free to correct my opinions! 🙂
– Arun Vallappan