Disruptive Innovation, yes. Generating return though

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The concepts of disruptive technology and disruptive innovation, that spread as benign viruses in the universe of entrepeneurship, were coined by professor Clayton M. Christensen, from Harvard Business School, in two works that became famous – the article “Disruptive Technologies: Catching the Wave”, from 1995, and the book “The Innovator’ s Solution”, from 2003. Christensen, in his 2-meter height, could have attemped a career in basketball, but he preferred to dedicate himself to the study of the economic facts and to understand why some businesses are more successful than others. The fact is that the word “disruptive” seems endowed with magical powers, capable of assuring charm and success to an enterprise beforehand.

Perhaps the habit of looking around the world from above has helped Christensen to see far. This is a fool’s joke , but it is a curious coincidence that one of the first Christensen’s conclusions on what leads well-succeeded companies to succumb to new emergent technologies and new markets is that they look at their customers too close. They do this so skillfully that they forget to look around, and then become hostages of a dominant reality; they are not trained to identify the trends sprouting in the market niches. A classic case is IBM that produced mainframes for great consumers as governments and corporations, but failed to see the utility of developing smaller computers.

Christensen’s ideas have even shaken the vision and business models of companies that were concerned, in their own way, with innovation. Inventors, scientists and entrepreneurs started to reinterpret products, materials and consumption needs in search of new technologies as a passport for success. The multiplicity of stories derived from the growth of the new economy, with mega entrepreneurships as Facebook sprouting from very simple ideas such as creating a digital message board, strengthened the mystic of disruptive innovation.

New products, new uses for old products, technological innovations are an important ingredient for the success of an enterprise. But, it is necessary that the newness complies with certain requirements to be transformed into a good business.

Application in the real world: it is firstly necessary that the technology be applicable in the real world. This is not always the concern of a scientist or inventor. Therefore, the role played by a specialist in marketing is, most of the times, fundamental, as this professional can help to transform the new technology into a product or service, or to discover where the consumers who still do not know they need that technology are, or to show the adjustments demanded by the consumers who may be willing to try something new.

Risk of replication: it is important to evaluate if the newness can or not be easily copied. If the cost of replication is low, the business may not be prosperous, dying before production. To make investment and effort be worth, the starting value has to be high for those who want to dispute the same space.

Result generation: another issue is to analyze the return expectation of the investment, taking into account the time needed for that technology or innovation to be adopted. In other words, it is not enough to have a brilliant idea, if it is not possible to make it generate results to avoid breaking. Without this, the innovation, no matter how disruptive it is, is just charm.

*Arie Halpern, economist, manager at the Israeli Gauzy