Creativity and innovation is defined as intelligence having fun. The business world is a canvas. Innovation starts off from the willingness to step out of your class to colour out of the box! And just maybe a new design can be formed. It’s almost always an experiment with uncertainty of its outcome.
However over the years, I have come to realize a steady pattern and trend to all great innovations, especially in business. Disruption always comes from someone external to a system. They seem like outliers at first. It’s like plotting a graph of competition over market needs with three key points that must be identified and surpassed like we do to outliers when plotting a linear or quadratic equation (outliers in mathematics are defined as points in a graph sheet that don’t fall within or follow the curve or line).
But what are the three points, the outlier agents? Against competition and market needs of today, how well are your idea, firm and business answering these good old points which also coincide with the three basic economic questions taught to us in our high school? The three questions that must be answered differently to invoke disruption in any industry are: What to produce, how to produce and for whom to produce?
In my years of teaching and stimulating disruption, I have thereby concluded that disruptive innovation happens when we try answering two of the three questions differently from the current industry norm.
To dig deeper into this Hexavian theory of how disruptive innovation happens, let me define disruptive innovation.
Disruptive innovation is when a company (most times startups) produces and eventually masters the marketing of products that seem to be simpler, superior and more affordable than the prior products in the market place, thereby creating a new value network. At this point this underdog takes a neglected market place that the incumbent leader isn’t interested in because its focus is to make better products at a better price for profit.
Innovation happens every day but not the disruptive ones. Yes, not all innovations are disruptive. But when disruptive innovation strikes an industry, today’s success can be the greatest enemy of tomorrow’s success. Disruptive innovation is a strategic type of innovation. It happens when at least two of the three basic economic questions are for the first time in its industry being answered differently.
Every time a market or industry is disrupted, its model is forever changed. Our world is at that point right about now, craving for us to initiate it. It is inevitable. So you’re either on the table pioneering it or you are on the menu being consumed by it. An example of disruptive innovation is what WhatsApp did to overtake the BlackBerry messenger market, or even locally, what the gospel singer Nathaniel Bassey did a few years ago when he brought Vigils to everyone’s phone for a whole month through his Halleluyah challenge (vigils on Instagram).
Disruption doesn’t just start. Whether it’s by an individual or business who comes in as an underdog, takes an isolated or uncontested or neglected space by cross pollinating industries (e.g. Silverbird made beauty meet with their media brand in the 1990s and pageants were formed; IT met with banking and Interswitch was born and when the Internet met with school yearbook, Facebook was born).
Since innovation can only come from something external to a system, it cross pollinates industries. And in that process, it creates a new market and value network by altering two of the three economic questions, and eventually disrupts an existing market, displacing established market-leading firms to create new products and alliances that solve problems.
Examples of disruptive firms, of underdogs making giants obsolete?
Well, Wikipedia did that to libraries, Encarta and encyclopedia. Uber is currently displacing taxis across cities all over the world, the same way Google is doing that to our Atlas Maps, Netflix is doing same to cable TV, WhatsApp successfully displaced Blackberry Messenger. You too can.
The ultimate trick to disruptive innovation is to define the triads of the basic economic questions. You can represent each question as the sides of a triangle – the three questions being: What to produce, how to produce and for whom to produce? Just try disrupting two of the three sides of the triangle and a totally unique business model, a new value market and a new product without competition will be created!
At the heart of disruptive innovation is consumer experience. And it’s something bigger firms outgrow. They increase revenue at the expense of client intimacy and satisfaction, they become less in touch. It’s so easy to forget to look at what you do in the eyes of the customer or any other stakeholder at that as you grow. It’s a honest mistake big firms make, it’s a rule they break. It’s a Golden Rule of life and business. Once this happens, you begin to lose intimacy and value, and eventually the market!
With two MBAs, years of studying innovation and over a decade of experience restructuring firms and setting them up for innovation, I have come to the summary that what kills companies is that they move strategic decision making to top management, especially finance and accounting department. Strategic decisions are now dependent on return on investment (ROI) with higher internal rate of return (IRR) and net present value (NPV) and shorter payback period, as against how truly user’s lives can be made easier, more exciting and better with their products, until a new company comes from the bottom to provide intimacy and affordability.
To stay on top of your game for success is the greatest enemy of success. One of the best advices I have ever gotten is, “Eizu, no one is loyal to you, but their needs have to do with you.” With this, I never let a win get to my head and a loss to my heart. I have seen empires rise and fall. It starts off when we grow too big to think small and in details to the detriment of our stakeholders. It’s called neglect. From politics to relationship to business, we see this every time. Bear that in mind as you build, as you grow and scale; ensure you stay relevant by always putting the customer first.
Every customer gets edgier, lazier and more price conscious with time. The antidote will be convenience and cost saving for him. Stay closer to their actual needs through feedback. Staying relevant means being disruptively innovative. There are different types of innovations, but there is one that cuts cycle time and cost for the customer. That’s what Prof Clayton of the Harvard Business School defines as disruptive innovation.
Disruptive strategy isn’t only valid for businesses but our individual lives. What are we doing right now to make our lives better and easier in 40 years?
How are we selling it to others and ourselves? That’s the real growth, the real innovation.
The amount in profit we make today at the detriment of customer experience is very similar to the success we make at the detriment of variables like health, mental/emotional state and family. Watch it, don’t let your cost of success become high, else we’d pay too much a price to succeed that it all seems meaningless. The same mistakes big organizations make, high achievers also make.
In any sphere, success is the greatest enemy of success. Sometimes we don’t make progress because we had made progress. We are all on the verge of disruption. After you stand on your feet stay on your toes. I look forward to working with you.
Eizu Uwaoma
