Technological progress is moving faster than ever before. It seems what was utopia yesterday is reality today. Tomorrow is an even bigger vision realized.
A study from the John M. Olin School of Business at Washington University estimates that 40 percent of today’s F500 companies on the S&P 500 will no longer exist in 10 years.
This model illustrates how disruptive innovation happens. Innovation emerges from below. Innovation from below starts with products that are lacking in meeting any needs, evolving into “good enough” and ultimately gaining adoption by the highest tiers in the market until they are over-engineered and providing value for which customers do not want to pay (over-serving customers). Once products deliver more value than customers are able to consume the product becomes a target for disruption.
Figure 2 illustrates my point of view in that the speed of which this innovation happens has increased. My point of view is that the time it takes innovations to go from the bottom of needs to over-serving customers had decreased exponentially. This is what I mean by innovation acceleration.
A tangible example is the acceleration of product development and launch of new and improved products. As an incumbent it may mean that you are able to more find ways to move up market, potentially over serving your customers faster.
Innovation acceleration also implies that the potential for being disrupted is greater in comparison to the past. It implies that disruption will happen more rapidly in the future than it occurs today.
Some considerations for the incumbents:
- Innovation acceleration is an opportunity to but you need to challenge yourself in finding new dimensions to innovation. If you’re already serving the top of the market this is of particular importance.
- You should consider untapped markets, i.e. customers that are not yet consuming as new sources of growth.
- You should think of business models to enable unlocking of new value.
- You should consider ecosystem and co-innovation in your efforts.
- Lastly: Innovation acceleration is a great opportunity to do more with less, allowing you to serve the same or more value with fewer resources.
With innovation accelerating the threat is greater than ever before for incumbents to be disrupted. New capabilities and thinking is needed to stay alive. Understanding the dynamics of innovation acceleration is a key part to ensuring that you continue to stay relevant.