“Innovation distinguishes between leaders and followers” Steve Jobs
Nowadays, implementing an innovative culture in companies and push inventors is of prime importance. Indeed, It’s an extraordinary time for innovation. Technological changes and industry disruption seem to be accelerating. And digital information networks are linking individuals, organizations, and nations as never before. SME and start-ups seem to have the advantage and a great role to play in matter of innovation. It is time for them to make the difference.
However, what kind of innovation path should companies chose ? There is a dilemma.
First, you need to know that there are two different types of innovations: disruptive and sustaining innovation. Sustaining innovation enables firms and companies to enhance their products performance based on the feedback of their best and largest customers. Sustaining innovation is about decreasing weaknesses and defects and making something faster or more powerful. On the contrary, disruptive innovation tends to lower performance, and has more defects, less speed and power. Such innovation comes from the needs that exist in niche market because it turns out to be neglected by current market offerings.
However, the key difference you should remember between sustaining and disruptive innovation is that sustaining innovation satisfies customers current needs and that disruptive innovation corresponds more to a business models which aims at meeting customers future needs better.
What is the dilemma for the inventor then ? Following a sustaining innovation path makes sense in short term but can doom the company to failure. Dedicating valuable resources to a niche and unproven opportunity can be future. Disruptive innovation comes from unmet needs in a niche market. It is the case for instance for smartphones market but also for many sector. Wikipédia rendered encyclopedia extent, Google maps replaced expensive navigation system, Skype dealt a big blow to phone companies, Netflix grove large videos rental companies to bankruptcy, Airbnb upsets hotel’s owners.
As a result the first question which comes in mind is: Why aren’t large companies at the forefront of disruptive innovation? The reason is that niche market is too small and unappealing to dedicate resources to small and unproven offerings. What’s more, large companies need to listen to their customers in order to continue successfully with their sustaining innovations but they need to look at niche markets to identify disruptive innovation and embrace them. This is a good omen for startups. Indeed, as long as their innovation has the potential to improve performance rapidly, it’s actually a good thing that their initial market is small.
Innovation has always been a great challenge for companies but today firms are more than ever challenged. Innovation has become a distinguishing criterion for SME.