Human beings’ endless tendency to get jobs done better at less cost through inventing and reinventing has been the underlying cause of the rise of new entrants and the fall of Innovation leaders. Although the race to profit from Creative Destruction creates the impression of chaos, some firms find it as an opportunity for the next wave of growth. Despite a high level of uncertainty, there have been reoccurring patterns—offering insights into avoiding the fall of innovation leaders.
Instead of suffering from loss, innovation leaders may lead wave after wave Reinvention race through recreation out of self-destruction, making them increasingly more significant and better-performing firms. For example, instead of suffering from the rise of the smartphone disruption wave to the iPod, Apple led the same wave by turning the iPod into an iPhone. Through this process, Apple recreated itself as a far larger and better-performing firm while causing destruction to the life-saving iPod.
Similarly, Sony sustained its edge in television by recreating the display and destroying its Trinitron display with LCD. Similarly, unlike Kodak and IBM, Canon and Toshiba sustained their edge in camera and storage through recreation. On the other hand, despite inventing LED, GE could not lead the next wave of lighting innovation, leading to a loss of business. Similarly, Kodak suffered bankruptcy from the creative destruction wave of digital cameras, as it failed to detect the latent potential of its invention.
We have found reoccurring patterns in investigating why some innovation leaders leverage uncertainties while most suffer. At the core of it are the differing characteristics of two competing technology waves and the varying competencies and approaches innovation leaders use to deal with them. Such patterns are insightful enough to formulate a set of choices to remain outstanding. This article spells out those choices for avoiding the fall of innovation leaders.
Ten choices for avoiding the fall of innovation leaders
1. Focus on Getting jobs done—for avoiding an identity trap
2. Leveraging the nonconsumption market—for dealing with mainstream market rejection
3. Strengthen management competence with science and empathy–for detecting latent potential early
4. Envisioning the life cycle of inferior emergence—for avoiding statistical failure rate trap
5. Develop a specific competence base—for addressing obsolesce of existing strength
6. Assess life cycles and progress in the nonconsumption market—for avoiding financial data trap
7. Adapt management practice with life cycle attributes—for aligning incentives and team structure
8. Focus on the life cycle and creative destruction dynamics—for dealing with resource allocation
9. Nurture a shared understanding of innovation dynamics—for avoiding corporate politics trap
10. Prepare and make a timely seamless transition—for escaping last minute desperate attempt
1. Focus on getting jobs done—for avoiding an identity trap
Often, a technology life cycle takes 50 to 100 years to reach saturation and face obsolesce due to the rise of the creative destruction wave. For example, film cameras and filament lamps took almost 100 years to face destruction. Hence, people get used to dealing with improving existing technology as opposed to finding alternatives to helping customers get their jobs done better. However, getting jobs done on the agenda is far longer than the technologies we use to serve them. Hence, the focus should be on getting jobs done to avoid the technology-centric identity trap. Here are a few recommendations for innovation leaders:
- develop a culture of focusing on helping customers get the jobs done better—through incremental advancement and creative destruction;
- pay attention to nonconsumption market and keep monitoring the progress of alternative technology cores in this market;
- encourage empathy for welcoming alternate technology cores to offer far better solutions;
- promote the next wave of growth through reinventions;
- once the current wave shows high profitability and mass adoption, get desperate to find alternative technology cores;
- pursue the mission of recreation through self-destruction.
2. Leveraging the nonconsumption market—for dealing with mainstream market rejection
Irrespective of the greatness, the mainstream market will find reinvention versions as inferior alternatives at the early stage of the life cycle. However, due to its uniqueness, the nonconsumption market may be eager and willing to pay a premium for the primitive emergence of alternative technology cores due to the uniqueness. For example, satellite imaging was the nonconsumption market for digital cameras in the 1970s, as could not be served well by the film cameras. Hence, here are recommendations for innovation leaders:
- segment potential market of reinventions as nonconsumption, mainstream, and left-out
- at the early stage of the reinvention, find a nonconsumption market;
- while serving the nonconsumption, focus on advancing the technology core to make reinventions better alternatives for the mainstream market;
- while serving the nonconsumption market, developing IP portfolio and supply chains for accelerating the progress and creating switching or entry barriers to competitors;
- for serving the nonconsumption market, develop a new division or a company;
- do not push minimum viable or early-stage of reinventions to the mainstream market with subsidies, like the way Startups have been doing;
- assess the performance concerning progress in advancing technology, creating IP portfolios, and developing new supply chains as opposed to market size and profitability.
3. Strengthen management competence with science and empathy–for detecting latent potential early
If you compare innovation leaders’ matured products with bulls, reinventions are like foals. A foal is far weaker than a bull, but it has a different genetic code. Consequentially, a foal will likely grow as a racehorse to take over the bull. Hence, identification of this genetic code at the early stage is essential for avoiding the fall of innovation leaders, requiring the science base of the top management.
- improve the science base of top management so that they can pick the information about the latent potential from the understanding of the underlying science of emerging technology cores;
- offer general and technology management education to mid-level engineering leaders to grow and occupy top management positions;
- expose senior management in the shoes of customers to develop empathy;
- invite candidates with relevant science and technology management backgrounds to the board;
- create a companywide culture of focusing on the underlying science of maturing and emerging technology cores.
4. Envisioning the life cycle of inferior emergence—for avoiding statistical failure rate trap
As more than 70% of innovations fail to generate profit after the release in the market and more than 90% of startups fail to drive reinvention waves, failure statistics favor the inaction of innovation leaders to reinvention possibility. However, despite the high failure rate, one of those days, the reinvention wave will succeed and take over the matured products of innovation leaders. Hence, how to avoid this rare disruptive event is an issue. Here are a few recommendations:
- instead of looking into statistical failure data, focus on detecting latent science or genetic code of the technology;
- based on the science base, assess the scalability for increasing the quality and reducing the cost simultaneously through a Flow of Ideas;
- evaluate the opportunity of advancing the technology to cross the threshold level set by the incumbent matured products;
- assess the scope of fusing the technology core with complementary ones for gaining momentum, reaching a radical performance state;
- evaluate the prospect of crossing the threshold, creating barriers, and gaining the monopoly market power.
5. Develop a technology-specific competence base—for addressing obsolesce of existing strength
Often, two competing waves require a significantly different competence base. For example, the technology base of gasoline vehicles is quite different from that of electric cars. Similarly, the technology base of solid-state disk drives significantly differs from magnetic disk drives. Hence, a single organizational structure for managing and leveraging competing technologies may not be suitable. Therefore, some of the suggestions are as follows:
- assess the human and organizational competence, and business model needed for target technologies;
- either upgrade the existing competence base or set up a new organization and recruit new people to pursue target technology to drive the reinvention wave;
- develop an IP portfolio about the new technology.
6. Assess life cycles and progress in the nonconsumption market—for avoiding financial data trap
As the mainstream market rejects the early version of reinvention, financial data of matured products of innovation leaders do not reflect the progress of a reinvention wave. Consequentially, innovation leaders cannot monitor the progress and adapt decisions. Therefore, to avoid the financial data trap, innovation leaders should
- assess the progress of adoption of early-stage versions of reinventions in the nonconsumption market, whether pursued by innovation leaders or outsiders;
- determine the rate of change in technologies and figure out how far technology is progressing to graduate from the infancy period;
- assessment of those two above exercises should lead to deciding the next step.
7. Adapt management practice with life cycle attributes—for aligning incentives and team structure
Due to varying maturity levels of the incumbent and emerging technologies, innovation leaders face the challenge of adapting management practices. Hence, here are a few recommendations for aligning incentives and team structure:
- for the team pursuing reinvention waves, adopt flexible work structures to navigate uncertainty and conduct experiments;
- incentives at an early stage should encourage experimenting with ideas and getting clarity about the science base for systematic progression;
- recognize the success of solving technical problems of the team working on an early stage of reinventions, whereas offering incentives for incremental advancement to the team working on product line extension of matured technology;
- for leveraging matured technology wave, adopt formal systems and structures to identify process improvements and test incremental product changes for efficiency gains;
- adopt separate organizational architectures to support exploration and exploitation activities.
8. Focus on the life cycle and creative destruction dynamics—for dealing with resource allocation
During the early stage, reinventions incur a loss invariably. Hence, innovation leaders must fund it through the profit earned from matured products. Such a reality demands a justification for diverting resources from profit-making products to support the loss-incurring alternatives. Here are recommendations to deal with the resource allocation issue:
- create a shared space for entering one another’s domain, expanding their vision, and helping them identify points of compromise;
- create a norm for joint decision-making and idea exchanges among innovation teams working at different phases of the S-curve;
- maintain a balance among the organization’s multiple innovation programs, operating at different stages of the S-curve.
9. Nurture a shared understanding of innovation dynamics—for avoiding corporate politics trap
Preparing the organization to work on the mission of incrementally advancing matured products and reinventing them through emerging technology cores simultaneously and making seamless transitions through creative destruction pose a significant challenge. Here are a few means to perform this vital management job:
- offer basic education of Wealth creation dynamics through technology possibilities as a series of reinvention waves, making the success transitory, to all people of the organization;
- develop a shared understanding of innovation terminologies by promoting a Unified Theory of Innovation;
- nurture a belief that making incremental progress of matured products and pursuing loss-making reinvention with the intent of unleashing creative destruction on profit-making matured products are equally important;
- let people accept the reality that if innovation leaders do not pursue recreation through self-destruction, outsiders will unleash Disruptive innovation effects on innovation leaders.
10. Prepare and make a timely, seamless transition—for escaping last-minute desperate attempts for avoiding the fall of innovation leaders
Transition timing is determined by the relative economics of the advancement of the defending and attacking or emerging technologies and the rate at which the technologies move. It also depends on the gap between the requirements of nonconsumption and the mainstream market. If the gap is high, the rising or attacking wave runs the risk of getting caught in the chasm. Besides, the transition requires preparing for new production facilities, R&D, distribution channels, infrastructure, business models, and supply chain ecosystem. Suggestions for a seamless transition from matured products to their reinventions for avoiding the fall of innovation leaders are as follows:
- pay attention to relative economics, rate of advancement, and the scalability of the emerging technology core to cross the threshold and go beyond;
- avoid the likelihood of getting caught in the chasm and suffering from Premature Saturation;
- synchronize the speed of advancement of reinventions, relevant external factors, and reequipping existing human and other assets engaged in mature products so that sudden collapse of the market of matured products and an explosion of the reinventions at the transition time could be balanced.
The literature on innovation dynamics describes the rise of outsiders or new entrants and the fall of innovation leaders, creating disruptive innovation theory. However, how innovation leaders can recreate through self-destruction is not well articulated. Consequentially, firms, industries, and society suffer from painful periods of creation through destruction. Hence, it’s hoped that this article offers initial thoughts about how to empower innovation leaders to lead reinvention waves and make seamless transitions instead of suffering from disruptive innovation effects, as observed by Prof. Clayton.
