Let’s first understand two things:
1. What is Innovation - It is about doing the same things in a bit better way or doing new things
2. Then what is Disruptive Innovation? - It is about making things that make the old things obsolete
Big Companies Fail with Innovation because:
Doing What We Have Always Done
When companies find successful business model, then it becomes their goal to exploit that advantage to its fullest extent. Big companies are then structurally organised to manage their currently successful business model. All the company structures, operations, process, tools and culture are geared towards doing what they have always done.
However the mistake companies make is in organising themselves to focus exclusively on exploitation. Every business model has a life-cycle. The decline of any business model is inevitable. When the business model eventually declines, the company will decline as well.
Companies that are structurally organized around a successful business model also find it more difficult to implement new innovations. A breakthrough innovation that fits a company's current structures is more likely to succeed. In contrast, an incremental innovation that does not fit into a company's current structures is likely to fail.
Companies are misguided when they continuously listen to their current customers.
Most big companies are not comfortable with disruptive innovations as these innovations do not satisfy their current customers. They only focus on the demands of the current customers. If the customer wants better products, they’ll keep evolving the same line of products.
Moreover, these kinds of in-house disruptive innovation can burn huge resources away from the sustaining innovation — which is required to compete against the current competitions.
Although the companies were continuously innovating to improve their product. But most of them went bankrupt continuously listening to their current customers and giving them what they demanded.
Disruptive innovations currently in progress that are already transforming the world are Machine Learning, Artificial Intelligence, Robotics, Automatic Vehicles, IoT Internet of things, Advanced Virtual Reality …
Disruptive innovation is a process where a smaller company with fewer resources are able to successfully challenge the big businesses. Big companies fail when they do not react to this disruption.
