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L6. Nondisruptive Creation - Coggle Diagram
L6. Nondisruptive Creation
Understanding
Nondisruptive Creation
Nondisruptive creation is just as much a modern phenomenon.
Microfinance, Viagra, life coaching, Post-it notes, health clubs, and environmental consulting are all prime examples.
In each case, the pie was expanded without destroying existing businesses or markets.
Life coaching didn’t disrupt an existing market or industry. It only created a new one.
We continue to see the nondisruptive creation of significant new markets.
In these new versions, while disruption is certainly at play, entirely new categories were also created to recognize the emergence of brand-new nondisruptive market spaces and industries.
Whether in advanced nations or in developing countries, history has shown nondisruptive creation to be key to innovation and growth as disruption has been. Despite all this, our recognition of the significance of nondisruptive creation is little more than nascent.
Going Beyond
Disruptive Trade-Offs
In nine short years, some 75 million riders have flocked to Uber. Yet cities have gone to great lengths to rein in the company.
Why? Well, congestion is up and public transportation ridership is down. But most significantly, the company’s success has come at the expense of taxi drivers.
This single disruption was arguably large enough to decimate a small community.
Disruption unlocks growth and creates compelling value for end users, but at painful adjustment costs for societies.
Why Disruption Has Become a
Near-Blanket Term for Innovation?
Ever since Joseph Schumpeter, advanced the idea of creative destruction, it has been embedded in the psyche of innovation and entrepreneurship.
As Schumpeter defined it, creative destruction occurs when an innovation creates a new market that displaces an earlier technology or an existing product or service.
Part of nondisruptive creation’s appeal is that it breaks this trade-off. It increases the economic pie with minimal to no social pain.
It’s a positive-sum approach to innovation, as opposed to the zero-sum nature of disruption. The impact of microfinance on people, jobs, and society has been almost uniformly positive.
A study by the University of Oxford predicts that within 20 years, half of U.S. jobs will be at risk of being eliminated by automation.
To absorb the human capital that will be released, new jobs will need to be created and not at the expense of other jobs. Nondisruptive creation can play a key role in this evolution.
The Advantages of
Nondisruptive Creation
Most companies today focus their efforts on what it would take to disrupt existing markets. This narrows their vision and blinds them to the wealth of nondisruptive, market-creating innovations they could unlock.
For established companies and startups alike, a nondisruptive approach creates several distinctive advantages:
Offering a good counter response to disruption.
Nondisruptive creation can be an effective way to respond to market disruptors.
When transatlantic ship travel was disrupted by air travel, for example, Cunard Line, which runs transatlantic passenger ocean liners, saw no way to match or beat the speed and convenience of air travel.
Cunard pivoted and made a nondisruptive market-creating move by launching the business of luxury vacationing at sea for the public.
Cunard opened up the entire cruise tourism industry. its nondisruptive creation of cruise tourism 40 years ago has unlocked a $120 billion industry that employs over 1 million people — a good outcome for business and for society.
Making execution emotionally and politically easier.
All companies want to innovate. But established companies face high execution hurdles when disruption is the way, because it means destroying their own existing business.
Fear of losing one’s job or current status can prompt managers to undermine disruptive projects, starve them of resources, or burden them with undue overhead.
Nondisruptive creation opens a less threatening path to innovation for established companies.
By framing their innovation efforts in a broader context that embraces both disruptive and nondisruptive creation, established companies can better manage their organizational politics and the anxieties of their people.
A Growth Model of
Innovation Strategies
Each approach to innovation strikes a different balance between disruptive and nondisruptive creation to achieve growth.
Reducing conflicts with social interest
groups and government agencies.
When the social costs incurred by disruption become too great, social interest groups and government agencies often lobby against, clamp down on, rein in, or tax the disruptor.
Since nondisruptive creation doesn’t displace existing businesses and livelihoods, it imposes minimal adjustment costs on society and allows companies to largely avoid these negative issues.
Avoiding Goliath.
When companies — especially startups — set out to disrupt an existing market, they often face well-entrenched market leaders with far greater financial and marketing resources.
While the popular press makes it seem that David always beats Goliath, the truth is that Goliath wins far more often.
Opportunities for nondisruptive creation loom just as large, and all companies —startups and established companies alike — would be unwise to overlook them.
How to Spot Potential for
Nondisruptive Creation
What makes some leaders effective at identifying brand-new problems to solve or brand-new opportunities to seize?
Fundamentally, they follow three steps:
Step two is to understand which organizations or industries would typically address the problem or opportunity and to figure out why they have overlooked it.
Understanding why an issue is overlooked will often provide insight into what your innovation must address to unlock a nondisruptive market.
The third step is to look for new technologies, platforms, and/or methods that allow you to solve the problem or seize the opportunity in a high-value, low-cost way.
Think, how can you use your creative power and the latest technology developments to solve problems or seize opportunities previously seen as out of reach by conventional means and methods?
First, they tend to think deeply about burning but overlooked issues in the world, in their industry, or in their vocation that they truly care about and that people or organizations are struggling with.
Areas Ripe for
Nondisruptive Creation
.
Many fall under what we think of as the social and human economy.
Upskilling people most likely to be replaced by smart machines
Meeting the needs of those at the bottom of the financial pyramid.
Privacy
Cybersecurity
Mental and emotional wellness
As the world’s population continues to grow and industrialize, mounting energy needs, carbon dioxide emissions, and the production of waste are creating all new problems.
As innovations continue to bring whole new sets of habits, tastes, and knowledge, new needs, problems, and opportunities will continue to emerge.
The time has come for them to gear policies and incentives to the delivery of nondisruptive creation, which benefits all of society’s stakeholders.
A model that places nondisruptive creation on an equal plane with disruption will allow us to unleash a wave of new growth and better align the goals of business and society.
That more expansive view gives us a chance to improve the
world. Let’s make the most of it.