When we think of innovation, we often do so through the lens of “creative destruction”. The phrase, which was memorably coined by economist Joseph Schumpeter, suggests that innovation typically happens when an incumbent is gazumped by a new upstart.
Examples of such innovation are legion, from Netflix destroying Kodak to Apple doing likewise to Blackberry. INSEAD’s W. Chan Kim and Renee Mauborgne believe that not only is this form of innovation not as predominant as we perhaps think, but that other forms of innovation may actually be better for society.
The pair, who made their name with their bestselling book Blue Ocean Strategy, chart a similar path. In their previous work, they argued that the best approach is not to go where there is a lot of competition but rather to aim for clearer waters where you will encounter less pressure.
In their latest book, Beyond Disruption, they argue that similar options exist when it comes to innovation. They highlight that disruptive and nondisruptive creation exist on opposite ends of the innovation spectrum.
Disruptive innovation is far more commonly understood and involves creating a new market within existing industry boundaries. Nondisruptive innovation, by contrast, looks beyond those boundaries to create new markets.
A key factor in this distinction is the impact the two forms of innovation have on society. When we see disruptive innovation, the new largely comes at the expense of the old, so this is accompanied by job losses and possibly even bankruptcies.
As a result, the benefits that come from the new economic activity have to be placed alongside the very real social consequences that are brought by the displacement. While sometimes these consequences are short-term in nature, often they are very much not and can last for generations.
“With nondisruptive creation, in contrast, the new is achieved without disrupting a preexisting market and its associated companies and jobs,” Kim and Mauborgne explain. “This creates positive-sum growth, because there are no losers, and no market player is made worse off.”
As a result, they believe that when growth comes via nondisruptive creation, it nearly always avoids the kind of social pain and disruption that is more typically seen when those vanquished by new entrants lose market share. This helps to bridge the gap between economic and social good.
“The challenge for governments and society will be to create new jobs that don’t displace others, with this as much an economic imperative as it is a moral one,” Kim and Mauborgne continue. “An effective economy is not only one that grows and modernizes, but one where no one gets left behind, and we can all participate in it and enjoy its fruits.”
What is non-disruptive innovation?
As Kim and Mauborgne explain, non-disruptive innovation is far less well-known than disruptive innovation, but they outline a number of characteristics that define it.
- It is recombinative – Recombination is something that I’ve written about many times. It’s when innovations occur not out of creating something wholly unique but rather by combining pre-existing ideas, technologies, or approaches in novel ways. Research suggests that this is by far the most common form of innovation today.
- It’s not always “new to the world” – Central to the concept of recombination is that innovations don’t need to be something never seen before. Indeed, a major reason why immigrants are often such productive entrepreneurs is that they apply things from their homeland in their new location. This kind of innovation often involves the creation of new markets because the concept is completely new to a particular area.
- It’s applicable to any geographic market – These innovations are also often ones that can be applied in any market. Indeed, Kim and Mauborgne argue that many innovations were designed initially for the so-called “bottom of the pyramid”. They believe that non-disruptive innovations can usually be relevant and useful anywhere in the world and to any socioeconomic group.
There are various concerns that the technologies that form the 4th industrial revolution will introduce disruption on a scale never seen before. While those fears have largely failed to materialize thus far, it perhaps remains prudent nonetheless for those with an interest in societal wellbeing to focus their innovation efforts on non-disruptive rather than disruptive innovations so that as much of society is brought along on the journey as possible.