Should All Companies Pursue Radical, Disruptive Innovation? The Pro’s and Con’s!

Radical or disruptive innovation often refers to the introduction of a new product or service that significantly changes the way an industry operates or creates a new market. These types of innovations can have a major impact on an organization's growth and success, as they have the potential to disrupt existing market dynamics and create new opportunities for growth. Companies that are able to successfully execute radical or disruptive innovation can dominate their industries and earn significant pay-offs.

However, pursuing radical or disruptive innovation can also be risky, as it involves investing significant resources into an untested product or service and there is a chance that the innovation will not be successful.?

Some of the potential pros and cons of pursuing radical or disruptive innovation include:

Pros:

• Radical or disruptive innovation can help an organization break into new markets or create entirely new markets, leading to significant growth opportunities.
• It can also allow an organization to differentiate itself from competitors and establish a strong market position.
• Pursuing radical or disruptive innovation can help an organization build a reputation as a leader and innovator in its industry.
• An organization that is able to successfully execute radical or disruptive innovation may be able to command a premium price for its products or services.

Cons:

• Radical or disruptive innovation can be a significant undertaking and may require an organization to make significant changes to its structure, culture, and capabilities. This can be challenging, especially for larger organizations that may have established systems and processes in place. Thus, we often see such efforts take place in different kinds of arms-length structure but at some point you still have to bring it all together.
• It can also be difficult for an organization to secure funding for radical or disruptive innovation projects, as the board of directors or co-investors may be hesitant to take on the risk.
• There is a chance that the innovation will not be successful, which could lead to wasted resources and financial losses.
• Radical or disruptive innovation can also lead to resistance or pushback from within the organization, as it may require employees to adapt to new ways of working or adopt new technologies.
• It can also potentially lead to backlash from customers, stakeholders, or competitors, especially if it disrupts established market dynamics.

For this reason, many organizations adopt a portfolio approach to innovation, which involves pursuing a mix of incremental, breakthrough, and radical innovation projects. This allows organizations to pursue radical ideas while also acknowledging that radical innovation is hard and risky and should not be pursued to the exclusion of everything else.?

A portfolio approach to innovation can be particularly effective when the organization has the right corporate culture and support systems in place to support innovation efforts.

There are many examples of companies that have successfully pursued radical or disruptive innovation. Some of the most well-known examples include Apple, which disrupted the music industry with the iPod and the smartphone industry with the iPhone, and Amazon, which disrupted the retail industry with its online marketplace and innovative business model.

Other examples of companies that have successfully pursued radical or disruptive innovation include Google, which has disrupted the tech industry through the development of products such as the self-driving car, and Tesla, which has disrupted the automotive industry with its electric vehicles and innovative business model. Netflix has disrupted the entertainment industry with its streaming service, and Airbnb has disrupted the hotel industry with its online platform for home rentals.?

International companies that have successfully pursued radical innovation include Alibaba, a Chinese e-commerce company that has disrupted the retail industry, and Samsung, a South Korean electronics company that has disrupted the consumer electronics industry. H&M, a Swedish fashion retailer, has disrupted the fashion industry through its fast fashion business model, and the Tata Group, an Indian conglomerate, has disrupted a number of industries through its various subsidiaries.

In two upcoming newsletters on the pursuit of radical, disruptive innovation, I will share a longer list of questions to consider on this and elaborate more on these cases and examples. Stay tuned!