It is now well accepted that change is indeed the only constant in any given market. With change comes innovation which ensures the wheels of the various market sectors are in motion. Disruptive innovation is such a precursor for change in a given industry. Disruption occurs when smaller companies with fewer resources successfully challenge the incumbent industry players (Christensen, Raynor & McDonald, 2015). Disruptive innovation, on the other hand, connotes the new technologies or way of operation that radically transforms the operations of existing businesses and industries. In so doing, the traditional market players (the “Incumbents”) are forced to alter their mode of operations lest they lose their market shares. The entities that introduce the disruptive innovations (the “Disruptors”) can be either existing market players or new market entrants. The Incumbents have to grapple with keeping up with the tides of change posed by disruptors or be swept away by the winds of change. This article seeks to assess the management of disruptive innovation by the Incumbents.
Incumbents constantly need to address disruptive innovations. Incumbents need to react to disruptions, but if they have to, they should not do so in a manner that stifles the competition who are mostly smaller companies. They should instead focus on innovating themselves to serve their core clientele better (Christensen, Raynor & McDonald, 2015). It is from this viewpoint that we descend into the strategies Incumbents should call upon.
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To understand the reaction of Incumbents, we first need to appreciate the two-fold effects of disruptive innovation. On the one hand, the market is opened up to novel business frontiers. On the flipside, however, they may create a paradigm shift in the market that may render the Incumbents to oblivion (Le Merle & Davis, 2017). In some instances, the Disruptors fail miserably. In this regard, disruptive innovation can be a thorn its flesh (Christensen, Raynor & McDonald, 2015). In a nutshell, the benchmark for the success of an in Incumbent’s survival is its ability to innovate and adapt to the changes (Le Merle & Davis, 2017).
The market optics depicts that only the innovative companies are currently winning in this age of disruptive innovation while the less innovative companies fall away gradually (Le Merle & Davis, 2017). What then does being an innovative Incumbent involve? A company striving to succeed and remain relevant in the face of disruptive innovations needs to make innovation its theme, be it incremental or disruptive. Le Merle and Davis insist on four elements that an innovative company or entity should possess to stay abreast of the competition. First, an innovative company needs to push its innovative strategy from the highest levels being managers or CEOs to the bottom of their human resource pool to be effective. Second, innovative strategies and plans need to be inculcated into all aspects of the company. Third, an innovative culture needs to be developed, appreciated and embraced by all persons in the company regardless of station. Lastly, such companies need to tap into external innovations rather than entirely rely on the innovative abilities of their workforce. Keeping an eye out for instances that create the innovative disruptions would indeed help pre-empt the Disruptors and adapt as appropriate.
To manage competition posed by innovative Disruptors, companies need to align their innovative structures with their business strategies (Le Merle & Davis, 2017). This will ensure the innovative culture remains engendered all through. Such alignment must be ongoing to keep up with the emerging trends in the market. There should also be in place a culture that supports innovation by the workforce at all levels. This will aid in ensuring employees do the innovation strategies of the company. Such will transcend to the company’s customers which is key. It is, after all, appreciated that a customer based approach is the key to unlocking a culture of innovation in a given company (Le Merle & Davis, 2017).
In a nutshell, Incumbents and Disruptors can co-exist in a given market if proper attention is given to the factors that precipitated the disruption. Instead of snuffing out the small-scale companies keen on innovating and disrupting, Incumbents can indeed strategize and innovate to remain relevant. Disruptions are here to stay; Incumbents better adapt and innovate if we are to remain afloat.
- Christensen, C., Raynor, M., & McDonald, R. (2015). What Is Disruptive Innovation?. Harvard Business Review, 93(12), 44-53. Retrieved from https://hbr.org/2015/12/what-is-disruptive-innovation
