Theories of Disruptive Innovation and Value Innovation
The ability to keep up/ come up with innovation has been the most important factor for big business survival since the 19th century. Every business, established or entrant, greatly relies on its research and development department to come up with new innovation or to guide in the adoption of new innovation. Some innovations involve introduction of entirely new processes or products (disruptive innovations) while others add value onto the existing products/ processes to make them better (value innovation). Innovation is a key element of strategy. This paper discusses disruptive and value innovation with Google Inc. as the ...view middle of the document...
A disruptive innovation can be a technology e.g. the Android operating system or an approach e.g. the Wal-mart Inc. discount stores. In his book, Christensen argues that big companies fail when they endeavor to protect their territories instead of pursuing the disruptive innovation. As such, these companies hold onto a market that is dwindling and fail to recognize the new markets brought by the disruptive innovation. As the entrants scale up the value chain, the once big companies find themselves locked out of their own markets. At this point, the company either sells out or is forced to adapt to new innovations.
Disruption is motivated by the existence of non-consumers who purely desire to get the job done but lack the ability to consume existing products to satisfy that desire. A company should be able to identify opportunities for growth in the current market as well as entirely new untapped markets. In identifying disruptive market opportunities, the company must seek to address the fundamental problems that consumers hope to address. This is a jobs-to-be-done market research approach; it taps into what really drives consumer behavior (Christensen 2000). Pursuing disruptive innovation needs emergent strategies since they work in highly uncertain situations. This approach retains company flexibility and gathers feedback from the marketplace on what works and what doesn’t. Companies change their strategies rapidly to adapt and take advantage of new information that emerges from the marketplace.
Value innovation, also known as sustaining innovation, consists of developments surrounding the core offerings of a company. They are incremental innovations introduced by a company on its existing products or new offerings that are only slight variations of the existing ones; improving the value of products. The company pursues deliberate strategies in pursuit of value innovation. The assumption is that the company, having been in business for long enough, is able to identify and even manipulate the customers’ needs. While this may be true for strong brands and market leaders, this assumption may obscure emerging trends that are likely to give rise to disruption. Over time, this trend creates products that are more expensive since the company seeks to serve the interests of its best customers. Value innovation creates more profits for the business in its already established customer base.
It is mostly technical – feature oriented. It is focused on improving the features of a product, to make it more likeable by the customers; creating more value for the customers. The essence of value innovation, therefore, is to sustain the company’s customer base and gradually improve the products they purchase from the company (Christensen 1997). It however works against the company where the improvements go way ahead or out of the customers’ living standards as is the case with Blackberry. In a competitive world, it is difficult to...