Disruptive innovation is a hot topic right now. Companies eager to take advantage of the pick-up in the U.S. economy are scrambling to come up with shiny new ideas to capture the money people are now ready to spend. Another reason it’s top of mind for many? Disruption as a concept has become very real because business executives are now battling it themselves.
Curiously, in the midst of the above there is a debate as to whether disruptive innovation is even a legitimate ambition for a company. One side argues big disruptive ideas are critical in a world where it’s best to disrupt others before they disrupt you. The other side argues the only realistic way to disrupt is with a steady pipeline of smaller, iterative innovations which, when added up over time, build competitive advantage.
As it turns out, the debate is actually moot. You need both. While concepting the big game-changer, a steady pipeline of iterative innovations (not incremental ideas, but true innovations) provides you some insurance. And if the latter truly are strategically planned they will build on each other, leaving competitors in the dust.
This is one reason to admire 3M, for example. They’ve suffered plenty of disruption over the years. Some drivers of their past growth no longer exist (like magnetic tape). But they’ve made up for the losses by successfully launching new categories like the Post-it line. And year after year they continue to perform well because they’ve figured out how to create a pipeline of both big and iterative ideas, almost all of which have a disruptive factor.
That both big and iterative disruptive ideas are needed is just one conclusion of my firm’s recent meta-analysis of all the theory and research on how one can disrupt competitors for your brand’s advantage.
Another conclusion: Absolutely no one is immune to being disrupted. Take Apple. They’re famous for successfully launching culture-disrupting innovations then platforming each so that a pipeline of iterative innovations can be built leveraging the same brand and sub-brand. Yet Apple also proves that even the most innovative companies can quickly be disrupted themselves. Despite the degree to which iTunes devastated the music industry when it was first launched just a few years ago, the iTunes platform is now suffering double-digit declines, disrupted by platforms such as Pandora and Spotify.
Everywhere, every day, companies big and small are disrupting and being disrupted. Coke is losing share to fruity waters. Gillette was blindsided by The Dollar Shave Club. Media agencies are being disrupted as work marketers previously gave to them they are now taking in house, enabled by the algorithmic power of programmatic buying. Insurers and health care providers are experiencing dramatic disruption from the Affordable Care Act. Of the Fortune 500 named in 1955, 88 percent don’t exist today. And of the approximately 500,000 new starts-ups annually in the U.S. alone, all are dreaming of disrupting the status quo.
This means the odds are good your company is on someone’s list.
And the odds are equally good you are not at all prepared.
What’s more, even if you had a great innovation ready to go, it’s quite likely you’ll struggle to launch it successfully. The failure rates are as high as ever. Sixty-six percent of new products fail within their first two years. And 97 percent fail to return their cost of capital.
So one conundrum every company faces is this: While survival requires them to quickly operationalize to have and launch a greater number of both huge and iterative disruptions, if they don’t immediately get materially better at launching them, they risk the cost of their failures will be even greater than today. Said another way, it’s time to think big about what will increase a company’s odds of identifying, successfully launching and scaling innovations.
How? Another finding of our meta-analysis is that there are some specific competencies that few in marketing or the C-suite have mastered that can improve their odds of disrupting others before they are disrupted themselves.
It’s not that they wouldn’t want to have them if they were exposed to them. But with the quarterly focus of everyone’s job, few have the reflection time to suss them out from experience. Few have the luxury of doing a big study in purposeful search of them.
Yet upon framing them, and the performance lift each gives the other, it is ironic to think that while everyone is expected to master the reading of a P&L, even MBAs don’t graduate knowing these new competencies which will drive the future results their P&L will then measure.
Mastering all the competencies would be a game changer for any executive’s career. But understanding even three or four would help any marketer thrive in a world of disruptive threats and opportunities. Some of the competencies identified include:
#1: Knowing how to recognize that you’re vulnerable to disruption. Once the disruption has begun, your options are limited. So it’s important to know the leading indicators and early moves that can mitigate your risk.
#2: Knowing which kind of innovations will give you the greatest return. There are 10 types of innovation, including brand innovation. But research shows the most commonly used – product innovation – generates the least value. Research also shows that one’s odds of pre-emption (the ultimate in disruption) increase when launching six or more orchestrated in unison. Knowing all 10, and how to leverage and group them strategically, can inspire ideas you’ve never thought of before and jumpstart competitive advantage.
#3: Knowing how to frame your innovation as cool, concept communication ideas deemed cool, and in fact, be cool. Recent research cracks the code on requirements and a “how to.” But the reality is, it will not work for everyone. Of course, just knowing from the start if you can leverage cool is helpful.
#4: Knowing how to rapidly diffuse and profitably scale an innovation.While those launching an innovation rightfully obsess over early adopters, the truth is sustainability and profit lie in quickly engaging the early and late majorities. But do you know the different marketing, message and communication strategies proven to inspire each to consideration and trial? In an ever more digital, mobile and social world, they may surprise you.
#5: Knowing how to now ID, model and optimize a target’s path to purchase. Technology has dramatically changed the purchase funnel and with it, communication mix and message strategies. But success starts with mapping the customer’s path. Do you even know how given today’s tech-enabled, multi-device, omni-channel, algorithm-enhanced and increasingly digital, mobile and social world?
#6: Knowing how to break, create and leverage habit for a brand’s advantage. The fact that 95 percent of human behavior operates on habit surprises many. Yet smarter innovations, greater revenues and many efficiencies can be found in understanding the power of habit in people’s lives. Conversely, executives ignorant on habit inadvertently train people to buy less of their product, or buy it only on discount, or have impotent switching strategies. They basically put themselves at a huge performance disadvantage.
#7: Knowing the four marketing communications strategies proven to build brand equity. Proven by big data sets in just the past few years, the four will drive preference, sales, margin and predictable revenue streams. This is critical since data reveals that marketers expecting brand equity to result from the cumulative effect of one volume-driving campaign after another will find themselves wrong.
These seven are among eleven competencies our research has uncovered. Anyone taking a deep dive into all competencies in aggregate will find a holistic formula to increase the odds of coming up with, launching, communicating and scaling disruptive innovations in sustainable and profitable ways. They may also find how they disrupt the conventional wisdom long believed to be true. Will you be among the leaders who quickly seek to learn them before your rivals? Or will you be among those who balk at the thought of having to master something so new at this point in their career?
Ironically, never has playing it safe been risker.
This article originally appeared on Forbes.com