Innovation. Disruption. Chaos. Words that signify a state of change are seldom liked by individuals in a leadership role. A steady, clear vision of growth and structured path to get there would be the ideal situation for an organization to exist in. A state where the external has been completely understood and all steps to be taken by the leader are substantiated by that very same understanding. But such knowledge about the business environment is rarely achievable. In today’s complex, dynamic world, having a static vision of growth becomes counter-productive with disruptive innovations holding the capacity to topple over market leaders and significantly impact the industry. Leading disruptive innovation requires new mindsets and behaviors, for leaders themselves and for the organizations that develop them.
But what is 'disruptive innovation'? A term, which was designed for specific business situations, now finds itself being used in every other business development that has an impact on the industry. The human tendency to associate closely related ideas to a single term is at play here. To actually understand the origination of the term and the sharpness with which it was wielded, we have to go back to 90s. Disruptive innovation was a term coined by Clayton M. Christensen in the year 1995. A professor with the Harvard Business School, he observed that incumbent firms within sectors would, without fail work towards to satisfy the need of their most demanding stakeholder group. This proved to be the most profitable bet for such firms. When new entrants enter the market, they have two options. They can either target the same consumer group or face established firms or to target a lesser demanding (profitable) group by innovating their mechanisms and providing a product that is completely new in the market. As the product gains momentum, because of a strong shift in consumer preference towards it, the market share of industry leaders slowly starts to shrink. This shift, if sustained can impact markets significantly and have a long term impact. Innovations of these kinds, according to Christensen account for a disruptive innovation.
Most organizations today are set up in a way that rewards predictability and control. A march towards stability often overshadows the need to drive innovations. With the access to open source technologies increasing exponentially, markets currently are poised to face new entrants that creatively handle uncertainty and bring in innovations that might impact the markets significantly. Organizations that fail to be at the helm of new changes within the industry may have to eventually react to it. The competitive pressure to innovate and shake up established markets is too powerful for companies—and the people who lead them—to disregard. This puts the onus on the leadership structures to evolve and build a culture that is ready to lead change. The following factors, according to Soren Kaplan, Founder of InnovationPoint become a must for leaders who see themselves as innovators
A game-changing mindset
One of the most important aspects of driving innovations is to approach the current way of functioning with an attitude of changing it. Leading disruptive innovation requires a new way of thinking. A mindset focused on approaching the world with the intent of changing the game: creating or doing something radically new or different. The intent to question the rules helps leaders understand aspects of their business model that can be evolved to better meet customer expectations and survive lead rather than survive market disruptions. This ability would help leaders identify opportunities where none might exist. And these opportunities aren’t just limited to products and services, but also include reinventing business processes or revolutionizing business functions.
A judicial use of data
With the trend of relying on data to make critical decisions, leaders often end up ignoring their intuitive understanding of market dynamics. But when it comes to leading disruptive innovations, a comprehensive data set rarely exists. Due to the unpredictable nature of disruptions, leaders need to increase their knowledge set and use it to understand business conditions more intuitively. This would help leaders use data more judiciously and take decisions in areas where data might not be necessarily present. Leaders must use whatever information they can obtain and then use their gut for the rest.
Leading disruptive innovation and change requires leaders to move forward despite great uncertainty. Adaptive planning involves taking action, learning from results and modifying assumptions and approaches accordingly. With the help of adaptive planning, leaders are able to turn around negative results into learning points that can help validate or refine decision making. This forms the bedrock of innovations. This alternative approach to how most companies deploy strategies and plans also help leaders and their teams sustain motivation and momentum during the uncertain times. The approach involves creating successive mini plans anchored within an overall strategic intent. Success metrics can be as much about learning and validating assumptions as they can be about more concrete deliverables like developing new technologies or capturing market share.
Leading disruptive innovation is a process fundamentally working in the dark with little pockets of light here and there. Unexpected technological developments, competitive moves, customer comments, economic and political shifts, and other unforeseen events make market situations unpredictable. But this unpredictability also provides a fertile ground to develop and test new ideas for leaders who can build an organizational culture that is comfortable ideating and experimenting with new ideas. While most leaders assume surprises should always be avoided, a few companies have learned to embrace surprise as a core cultural value and tool for creating breakthroughs.
Disruptive innovations require leadership structures that foster a culture of game-changing innovation and provide the framework and motivation to generate ideas and execute solutions. It’s an essential skill for any business leader, from a small start-up to large companies, with the desire to transform organizational processes and behaviors. It needs leaders that are bold enough to break the rules, redefine the playing field and effectively disrupt the status quo on a daily basis. Ideas, executed well, are the real currency of success in any competitive marketplace. All this also comes with the responsibility of keeping people motivated and engaged while simultaneously asking for both high levels of creativity and excellence. Being able to balance the two becomes a necessary trait for leaders.