How innovations become better and cheaper

What do address books, video cameras, pagers, wristwatches, maps, books, travel games, flashlights, home telephones and cash registers all have in common?
And for that matter, add walkmen, day timers, alarm clocks, answering machines, The Yellow Pages, wallets, keys, transistor radios, personal digital assistants, dashboard navigation systems, newspapers and magazines, directory assistance, travel and insurance agents, restaurant guides and pocket calculators to the list too!

Each is in the process of becoming a victim of what we call a “Big Bang Disruption” (BBD)  a disruptive technological innovation that enters the market with a bang.  Big Bang Disruptions experience dramatic market adoption right out of the gate, often causing unintended collateral damage to incumbent businesses.  When a Big Bang Disruption appears, consumers suddenly and enthusiastically abandon older and even defining inventions for something new and often untested.

Big Bang Disruption is a radical new kind of innovation.  Its practitioners combine increasingly cheap off-the-shelf component technologies with new business models and test them directly in the marketplace.  If they fail, they fail quickly.  If they succeed, customer adoption can be nearly immediate.  Once launched, the winners in this model scale rapidly, as consumers use some of the same technologies as the innovators to socialise their preferences on a near instantaneous basis.

But the defining characteristic of a Big Bang Disruption is that it is from the moment of introduction better and cheaper than the traditional product and services they replace, leading to sudden abandonment of the old for the new.

How is that possible, and why is this devastating feature of Big Bang Disruption spreading beyond the world of consumer electronics and computing to industries as far-afield as energy, education, financial services, manufacturing and government?

You’ve probably already guessed that the Big Bang Disruptor for each of products and services listed at the beginning of this post is the same:  The smartphone.  By combining connectivity with the Internet, high bandwidth data, high definition displays and cameras, access to outside data sources including GPS and search, and sensors, smartphones and other mobile devices have become a platform for launching one Big Bang Disruptor after another, at a speed that seems to be accelerating.

Whether it’s as simple as synchronizing calendars, connecting your current location to review sites for local restaurants and other services, playing games across the Internet or paying without cash, the combination of component technologies, networks, and app stores that drive the mobile revolution are disrupting the supply chain of a remarkable range of different industries.

In many though certainly not all examples, the disruptors take the form of a software-based app, launched by one of thousands of active developers.  Some of these billion-dollar companies; some are individuals working on products in their spare time or at a local hackathon.  (In the winner-take-all world that increasingly defines today’s disruptive innovations, some of the latter, including Twitter, Zynga and Yelp YELP +0.41%, have become the former in record time.)

According to Mobile Future, a coalition that promotes investment in the mobile ecosystem, by the end of 2013 smartphone users will be downloading two billion apps every week.

That’s a lot of disruption.  And much of it is unpredictable—at least using the traditional tools of strategy and planning.

Readers familiar with the seminal work of innovation theorists including Michael Porter and Clayton Christensen will see immediately the radical nature of these and other Big Bang Disruptors.

For one thing, they don’t compete on any of the traditional dimensions that have long defined industries.  They don’t target high-end customer segments with a premium alternative.  They don’t strip down a mature, feature rich offering for value-conscious customers.  They don’t deconstruct existing products and pitch them to a new market space.

The developers of Big Bang Disruptions often don’t even see the traditional products and services they replace as competition. They don’t share your approach to solving customer needs.  And they’re not sizing up your product line to offer slightly better price or performance with hopes of gaining a short-term advantage.

Usually, they’re just tossing something shiny in front of your customers, hoping to attract them to a business that’s completely different from yours.  What’s core to your business may be something these new competitors give away, perhaps without any real strategy for monetizing their success until after it happens.

That kind of competitor means nearly everything you know about competition and strategy is about to become dangerously wrong.  We need a new theory of innovation, and new tools.  Seeing them coming, responding in time, and creating your own Big Bang Disruptions requires new skills, new organizations, and new business models.

Paul Nunes will be discussing strategies to cope with Big Bang Disruptions at the Chief Marketing Officers Conference from the 18-19 September 2013 at  the Fairway Hotel and Golf Resort, Johannesburg. To learn more about this event – click here now.

_________________________________________________________

Paul Nunes
Global Managing Director of Research, Accenture Institute for High Performance
The Accenture Institute for High Performance is a global think and act tank, with researchers in Boston, London, Mumbai, Beijing and São Paulo. Paul’s research has focused on IT-led changes in business and marketing strategy, with a specific focus on the changes occurring in consumer behaviour and marketing channels. He served as co-architect of Accenture’s High Performance Business research initiative, alongside Accenture’s Chief Strategy and Corporate Development Officer, and continues to lead the company’s High Performance Business research programme. His research on business strategy has helped to shape the company’s strategic vision as well as its critical imperatives for change. He has written numerous articles and book chapters on marketing and business strategy. His most recent Harvard Business Review article, Big Bang Disruption, was selected as a Wall Street Journal CEO Must Read. He is co-author of two books, Jumping the S-Curve: How to Beat the Growth Cycle, Get on Top and Stay There and Mass Affluence: 7 New Rules of Marketing to Today’s Consumers. He has been a trustee of the Marketing Science Institute and is a frequent speaker at industry conferences and business schools.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s