Identifying the next commercial opportunity is (or should be) at the forefront of the business vision. But just ‘innovating’ or creating the next big idea is not enough to fulfil a vision in isolation. Companies need to understand what type of innovation they need and alongside this, what type of development approach is required to ensure a demonstrable result. At Black Pepper, we see innovation in three distinct categories:
- Sustaining innovation: improving and enhancing products/services for the same customer.
- Efficiency innovation: taking an existing product/service and making it more efficient and lower cost.
- Disruptive innovation: creating an entirely new product or service for a new or existing market.
While all three types have a time and place, we’ve seen disruptive innovation viewed by some as a business buzzword and by others as a risk they would rather not take. What it is and must be, is critical to your business growth and longevity.
Businesses work in cycles, with today’s biggest names continuously at risk of being usurped by innovative newcomers, especially if they continue to stick to their laurels instead of aiming to disrupt their own market with continued innovation.
Take Blackberry for example; in 2007 it was one of the biggest players in the smartphone market. Its QWERTY keyboard and ability to monitor emails in real-time made it indispensable for the professional demographic. However, it didn’t take long for the competition to catch up as Blackberry focused on efficiency innovation, ensuring processes were streamlined and capital freed.
By ignoring disruptive innovation, its competitors took advantage of the touch screen market and Blackberry was soon the smartphone laggard playing catch up.
If you’re not pursuing disruptive innovation, your business is at risk. By investing solely in sustaining your products, you’re at threat of being left behind. If you don’t disrupt the market, another business will do it for you.
The key is getting the balance right. IT departments often excel in continual improvement of the existing offering and all companies can benefit from this efficiency innovation. However, a vital portion of working capital must be invested in disruptive innovation to ensure that while there is core business development, there is also more significant, ground-breaking developments in the pipeline.
If capital isn’t invested wisely, businesses are at risk of being left behind by competitors – it won’t be a matter of if, but when. It is at this point that they will regret their failure to innovate earlier.