Innovation snobbery is bugging me.
It was a full on pandemic at SXSW, but that’s to be expected. Great event. But ground zero for innovation snob outbreaks. Then the affliction flared up in various startup blogs throughout the spring, and was even an itchy recurrent rash at Big Omaha.
At EntreFEST (Iowa City, May 15-16), it fueled a great ongoing dialogue during the track on innovation in existing companies, which I was lucky enough to host.
One of the points I tried to make early in my presentation was that innovation can’t just be the job of the cool kids. Innovation needs to be everybody’s responsibility.
The flip of that, though, is that innovation occurs in different flavors, and it’s not everybody’s job to be producing every flavor of innovation. In fact, in most cases, it can’t be.
Which takes us to:
Innovation Snobbery, Strain #1: Sustainers vs. Disruptors
The cool kids comment was aimed at the first major split in flavors of innovation: sustaining and disruptive.
This delineation as first popularized in 1997’s The Innovator’s Dilemma, by Clayton Christensen.
Sustaining innovation is all about refining your existing business model. It’s frequently about improving process or workflow. It’s about getting more efficient and improving margins. It can be about adding features to make your best customers wildly happy. And it’s everybody’s job. High performing, established companies are often great at sustaining innovation.
Disruptive innovation, on the other hand, is about attacking existing business models. It’s about discovery, not refinement. The struggle isn’t improving already good margins; typically the struggle is about just getting to a positive margin. The focus is usually on disaffected customers on the edges who aren’t wild fans of what already exists.
Disruptive innovation typically requires separation and space to develop inside an existing company. Because the same teams that are really good and really focused on refining existing business models aren’t naturally tolerant of attacks against those same models. Innovation that attacks the existing model is treated like a virus – something to be eradicated. There’s a reason why white blood cells are a popular analogy here. It’s also why most really good, established companies are typically really horrible at disruptive innovation.
Go to a startup or innovation conference, and it’s clear it isn’t cool to be labelled a “sustaining” innovator. It’s a mark of shame. Grab a big scarlet “S” and stick it on your sweater.
You slow, lumbering sustaining dinosaurs are going to be eaten by the cool kid velociraptors! Run!
Sometimes it’s deserved. Companies in industries that are being disrupted (say, the media industry, which I work in, or the music industry) have to look beyond sustaining innovation, because making incremental improvements to their existing business model is no longer sufficient for survival in a disrupted industry. But, as Christensen’s research showed, most of the time they can’t adapt to disruptive change. The white blood cells kick in. And eventually those companies die.
But being good at sustaining innovation is hard. It needs to be respected. This was one of the points made by Miguel Encarnacao, Chief Innovation Officer at ACT, who also presented as part of the EntreFEST track. One of Miguel’s points was that developing a sustainable culture of innovation, which may focus on smaller innovations first, makes it easier for the organization to accept big disruptive changes later, when that becomes necessary.
Why can’t we all just get along?
It’s a difficult issue, but more annoying is a relatively recent variant. Call this:
Innovation Snobbery, Strain #2: “Big D” vs. “little d” disruptors
Here, the disruptive innovators start turning on each other. I feel like I run into this variation more and more frequently, and it takes the form of one self-proclaimed disruptive innovator dissing another self-proclaimed disruptive innovator.
It goes something like this: “See that dude? See him!?! He thinks HE’S disruptive! It’s not disruptive unless you’re trying to create a COMPLETELY new market! Like the next Facebook or something. That dude is a fake. He’s a fake disruptor.”
Let’s break this down. Yes, the dude trying to create the next completely new thing – the next Facebook, the next WhatsApp, the next Pinterest – yes, he (or she!) is trying to create disruptive innovation.
But that guy at a music label who is trying to figure out how to change his business model to include streaming music? And the woman at a traditional media company who is trying to implement new digital revenue models that work in a hyperconnected, increasingly mobile world?
Neither of them is trying to create streaming music or real-time bidding ad models. But they’re practicing disruptive innovation, too.
Keep in mind the example Christensen spent the most time on in The Innovator’s Dilemma. It wasn’t about companies trying to cope with the invention of the next Facebook. (This was 1997, after all.) His most detailed example was the failure of hard drive manufacturers — specifically those that made 8-inch drives — to cope with the disruptive introduction of — wait for it — 5.25″ hard drives.
The reason? The 8″ companies got really good at making and selling 8-inch drives. Those drives were faster, held more data, had lower failure rates (so, collectively, “were better,” the way the company defined “better”) and had higher margins (“way better!”). Those companies had all the technology needed to make 5.25″ drives. But why sell cheaper, lower capacity drives with less profit margin? Why invest all of that 8″ profit on new production lines? Why damage our existing business like that?
The answer is: most of them didn’t. Instead of becoming like their disruptors, they fought for their higher margin, well-known business model. Instead of attacking their own business model, they let others attack them with cheaper, smaller drives. And about 90% of the incumbents died. They held on to their “better” business model all the way to the grave.
This, more than the “create a whole new market,” was the kind of disruptive innovation Christensen was focused on.
If you want to call “inventing the next Facebook” the “Big D” form of disruption and “figuring out how to use new technologies to disrupt your own business before somebody else does” the “little d” form of disruption, fine.
The “little d” disruption may not always be as relevant for a startup. But it’s incredibly, incredibly relevant for existing companies.
And that “little d” form of disruptive innovation? It’s hard. Just judging by the failure rates of incumbents in disrupted industries (91% in Christensen’s research), it’s really hard. Partially because it is about so much more than just tech. It involves changing sales models, workflows, and production processes. It means diverting internal investment away from the core business (which has high margins and pays the bills) and into a business that will, at least at the start, have lower or even negative margins. It often means (and this is sometimes the hardest part) changing culture.
In an era when the pace of innovation is increasing exponentially, the ability to cope with disruptive innovation is critical for existing companies.
So, self-proclaimed disruptors: respect your sustaining innovation brethren. You can’t exist if everybody is trying to attack the current business model. Somebody has to be working on the existing business. Making something good better isn’t easy.
And sustaining innovators: stop killing the disruptive innovators inside your organization. Yes, they’re attacking your business model. They’re trying to do it before someone else does.
And “Big D” disruptors: yes, the startup world is hugely challenging – but put down the holier than thou stuff that gets in the way of learning, and realize that “little d” disruptors in existing companies have some different challenges that you don’t have to deal with.
Put down your arms, drop the snobbery, and realize you can learn something from each other.
In the best sessions at events like SXSW, Big Omaha, or EntreFEST, this is what happened.
Then again, it’s also possible that we can all continue the endless, pointless game of “I’m a real innovator and you’re not.”
What’s most important to you? Learning? Or declaring your spot on some fictional “Real Innovator Totem Pole”? Make a choice.