If struggling with a target has limitations as a change strategy, what else can we do?
We can replace the whole darn system!
Disruptive Innovation is a way to replace an entire system.
The framework was originally developed by Clay Christensen to explain how newcomers in an industry could successfully replace mature and very successful corporations.
These successful corporations develop themselves by creating "sustaining" innovations, ones that support their previous successes, using their money and expertise to grow. Eventually, sustaining innovations create a product that has many features of no or even negative importance to their customers. The customers are tied in to the product line by their past choices, and learn to live with what they don't want for what they want. Additionally, the cost and complexity of the product tends to rise over time as a direct result of these sustaining innovations, and a market grows that would like the some parts of the product, but not the cost and complexity. The corporation doesn't address these concerns because of the money they are making and the relationships they have with their best customers.
A "disruptive" innovation partially breaks down the stability of the mature industry. Typically, the product created through this kind of innovation is far cheaper, and does not have the complexity of the mature product. It also tends to target a market ignored by the mature industry. If the disruptive innovation succeeds in tapping a market, it establishes a financial and technical base for improvements. It becomes good at the product it is making.
This process takes away part of the market for the mature industry. This first market is often one the mature industry doesn't consider a profitable market, or one that the mature industry considers a weak market compared with their mature industry customers.
The newcomer, now having a stable financial and customer base, chooses a new market to target for its disruptive strategy. Again, this will be a market that the mature industry has little or no interest in, but that is "upmarket" from the original target for disruption.
And so on. Until the entire industry is replaced by the disruptive newcomers.
Next: A Disruptive Example