Thinking About Disruptive Innovation


In our last call, I talked about disruptive innovation — and inescapable necessity of it in our shared realm of “sustainability”, for a very simple reason. For most businesses, the way to make more money is to sell more stuff. But, as Dave Gustershaw of Interface was fond of reminding anyone who would less, each additional kg of stuff  moved an additional km means, all things being equal, more environmental impact.That would appear to couple economic prosperity with environmental doom. EcoEfficiency — Bucky’s old “doing more with less” — certainly helps, but it doesn’t help nearly enough. Not in a world heading toward 9-12 billion people.

So we need radical innovation — not just in how we do the things we do, but it what things we do in the first place. And we need, I believe, disruptive innovation — innovation that transforms markets and entire industries. This is dangerous territory, since it risks disintermediating existing value relationships, which is fine for the disintermediators (like Amazon) and not so fine with those left holding an empty shopping bag (like local bookstores). And it risks cannibalizing existing markets, which is perhaps is one of the reasons most companies and people resist it. But your reasonable and prudent choice to not cannibalize your legacy does nothing to prevent a competitor, or an upstart in a garage, from jumping into “your” legacy and eating your lunch.

This sort of innovation comes in many forms in additional to technical:

  • service models: think Interface, ZipCar and AirBnB
  • purpose stataements: think Ford seeing itself more as a mobility company than as a vehicle manufacturer
  • challenging the “growth above all” business model: think Patagonia’s “don’t buy this jacket”
  • investor relations: think companies as diverse as Jones Lange LaSalle and Unilever telling Wall Street to “take a hike” by declining to offer quarterly advisories (and companies like Ford taking advantage of the Street’s legendary short term obsession to the benefit of its longer range plays)

With these things in mind (in particular the challenge of “collaborative consumption” on the “stuff equals money” model), I put together a workshop on disruptive innovation at Sustainable Brands conference a few weeks ago. Joined by New Leaf Paper CEO Jeff Mendelsohn, and former Sustainability Coalition Executive Director Bonnie Nixon, we challenged our participants to look four industries in the eye and think about shaking ’em up.

The first question: Which industries are most ripe for disruption?  Which companies? Perhaps those with:

  • long supply chains;
  • high resource demands and footprints;
  • large value adds, ripe for disintermediating;
  • high touch businesses that could be massifed, or
  • mass businesses that could be “internetted” into high touch.

Then we offered the groups a few questions that could guide their thinking:

  • What business are you really in? (What is the value your customers are really buying?)
  • Where is the money being made in your value stream? (Sketch it!)
  • Who’s making that money? (What could they take from you?You from them? Or create new value?)
  • Where’s the sustainability impact – and opportunity?
  • Where could someone else take value from you? you from them?
  • Where could you deliver more value to customers?
  • What would you need to do to do that? (Consider stakeholders, barriers and next steps.)

My question for you: What might emerge if you were to ask those questions about yourcompany?