Social Icons

Thursday, July 28, 2011

Disruptive Innovations

Innovation according to Peter Drucker is creating value from existing resources.  More often than not, innovation is mistaken for creativity.  The more important thing about innovation is that it must create value for society.  First and foremost, there must be sociological impact. And economic impact.  (Technology comes in third) Facebook, now wildly popular, is not a techonological or economic innovation (the owners did not make much money before with the basic service).  But facebook has a very strong sociological impact - that of connecting friends and relatives, even reuniting long lost ones.

The aim of every innovation are to l.  change the rules (as blue ocean) or the industry and 2.  to disrupt the industry.

The key ideas here came from Clayton Christianssen of Harvard Business School.  (He authored key ideas on business model - the new thing since strategy)  He also wrote on the Innovator's dilemna.  He found out that the successful innovations are not the high tech or sophisticated ones.  The market, for which the technological innovation has been chosen, chose low tech, low cost, afforadable, lighter version. This was observed  in the memory industry- the equivalent of studying livng things is through fruit flies where everything is accelarated.

Examples of disruptive products and services are: Wikipedia (it caused the demise of Encyclopedia Britannica and Encarta), Skype (disrupted telcos?), Sun Cellular with its unlimited text and call disrupted other Big Telcos in the Philippines, Cebu Pacific disrupted PAL (the shipping lines, the bus companies).

Why are they disruptive?

But wait, something seems to go wrong here.  Prof, I thought innovation is creating value with existing resources.  But what happenned to Wikipedia - it nuked a $l billion encyclopedia industry.  Yes it was disrupted but brought back the value to customers.  Nothing was destroyed.

There is more on my slides at slideshare, under the title "Innovation and Entrepreneurship."

Slideshare - Innovation and Entrepreneurship by Peter Drucker



"Every generation needs a revolution an ENTREPRENEURIAL REVOLUTION."

No comments:

Post a Comment