Customer Experience

Customer Experience

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Is Disruption the same as Innovation?

Categories : DisruptionRetail

We are increasingly seeing innovation becoming part of the CxO growth agenda and Capgemini is a recognised leader in this area. So it is understandable that I got a bit of grief for using the term ‘Disruption’ instead of ‘Innovation’ in my previous posting. So that begs the question, is Disruption the same as Innovation? My answer is: It depends. Innovation comes in various forms and can affect different parts of the organisation in ways that may or may not cause disruption. Disruption on the other hand is almost always an end result of an innovation; new technology, process, products or applying an old way of doing things in a new context/industry.

To illustrate my argument, let’s look at the iPod. According to me, the iPod by itself is not disruptive; indeed, I can stick my neck out to say, that the iPod is probably not a very innovative concept either. Flash memory-based and hard drive-based mp3 players were in existence before the iPod arrived on the scene. Apple however, moved the goal post in two steps. Firstly, it simplified the design and added the iconic white earphones to make it a must have gadget for everyone. Secondly and more importantly, they tied it to iTunes. iTunes created a platform that provided a dedicated supply of software and music to create a virtuous self-sustaining community that has driven up the uptake of the iPod while simultaneously redefining the music industry. By introducing iTunes, Apple has answered the question posed by Lynda M. Applegate in HBS Working Knowledge: Can you expand into adjacent businesses by either taking over activities that used to be done by someone else in your industry, expanding into new markets, or adding new products? In this case Apple created an entirely new market space and changed the game for those who were not its usual competitors, such as music, media, and consumer electronics companies. It has moved the dynamics of the industry from being technology led to being led by the customer experience. Apple then leveraged the successful ‘personal mobile music’ business model and adapted and applied it in another industry. The introduction of the iPhone has successfully disrupted the telecom business in most countries except Japan. Again, while the simplicity of the hardware cannot be underestimated, in my opinion iTunes is the true disrupter. Similarly we have seen the rise of true disruptive product like the Wii, Vodafone M-pesa etc from established and new players. So how do companies work towards creating disruption in the marketplace? In my opinion, companies should consider a three stage process: Understand, Strategise, Deliver. Understand: Clayton Christensen's 1997 book The Innovator's Dilemma provides a good starting point for organisations to understand the need for disruption and its importance. Strategise: While there is an abundance of management thinking in this space, in recent times we have seen the emergence of the Blue Ocean Strategy as a strong school of thought in this space. W. Chan Kim and Renée Mauborgne’s Blue Ocean Strategy endorses creating new market space rather than competing in an existing one. Deliver: As technology is an enabler in the new disruptive world, business need to align their IT to meet business needs. Capgemini’s TechnoVision provides the answer. TechnoVision provides a strategic framework to help clients develop the most relevant innovations for their organizations. Contrary to most IT frameworks, TechnoVision puts the customer experience (termed The You Experience) at the centre of the framework. This is a very important concept or as Jeff Immelt once put it, “Innovation without a customer is nonsense” To conclude, let me borrow an analogy from Formula 1; in the new world order, innovation will decide whether companies make the starting grid, while Disruption will decide the podium finishers.

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V. Kurup

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