The Four Stages of Responding to Disruptive Innovation

What can we learn from the experiences of the record and newspaper industries about effectively responding to disruptive innovation?

That’s the question that I discussed with Andrew Byrne from The Cloakroom this afternoon.  As we talked, I realised that the steamroller scene from A Fish Called Wanda perfectly illustrates what normally happens.  Here is the scene – it contains a ton of spoilers and bad language – but the movie came out in 1988, so if you haven’t seen it yet I’m not sure what you’re waiting for:

As Ken rolls towards Otto with the steamroller, you can see the four stages of responding to disruptive innovation.

  1. Ridicule: as Greg Satell says, innovation always looks crappy:

    However, the kind of innovation that changes paradigms is usually crappy. The stuff that doesn’t work all that well. The carpetbaggers who come into your industry utterly unprepared to service your existing clients. That’s where the danger often lies.

    Because it looks crappy – it’s not very threatening at first. So the powerful incumbent ridicules it – just like Otto ridicules Ken on the steamroller.

  2. Aggression:  once the threat is recognised, when there finally is a response, it’s usually aggressive.  When Otto realises that he might be in trouble, he starts shooting.
  3. Bargaining: when aggression doesn’t work, we bargain. How we can we coexist? How can we fit the disruptive ideas into our current business models?  Otto bargains like crazy.
  4. You get smashed like a bug: it ends when the steamroller runs you over

We’ve seen this pattern again and again. How can you get crushed by a steamroller? Go through that response cycle.

Clay Shirky points out today that the steamroller is heading towards higher education now. It’s a must read article – both for those interested in higher ed and for those interested in innovation.

Here is one of the key quotes:

Every college provides access to a huge collection of potential readings, and to a tiny collection of potential lectures. We ask students to read the best works we can find, whoever produced them and where, but we only ask them to listen to the best lecture a local employee can produce that morning. Sometimes you’re at a place where the best lecture your professor can give is the best in the world. But mostly not. And the only thing that kept this system from seeming strange was that we’ve never had a good way of publishing lectures.

If you read the article, you can see the first two stages of response from established universities to massively open online courses (MOOCs) – ridicule and aggression.  Soon we’ll start to see bargaining – “how can we fit these in with our normal operations without having to change anything?

There is plenty to learn from what’s been happening to news over the past few years.  What is the best response for higher ed? We need to break the ridicule-aggression-bargaining-smashed like a bug cycle.  There are a few ways to try to do this.

In another very good post, Greg says that you need to ask this question:

If someone came to you with a breakthrough innovation, how would they sell it?

Answering this question will help you recognise the barriers to put up to innovation – it can help you identify blind spots.

Another good question to ask is: if we were starting today, would we do this?

If you were starting a new university today, would you build a big campus with lots of gigantic buildings? Who would you hire? Would you deliver lectures locally, even if they’re not among the best in the world?

The new higher ed experiments have answers to these questions that are very different from those that we get from most existing universities.  That’s a danger sign.

The best respons: start experimenting like crazy.  There are two good reasons to do this:

  1. No one knows what will end up working best.  When that is the case, you should be in there yourself, experimenting away, in case you run into a business model that will work.  After all, the existing universities do know a few things about educating.
  2. It builds absorptive capacity. Absorptive capacity is the ability you have to take in ideas from the outside.  It’s really hard to absorb ideas from outside your organisation if you arent’ generating and executing new ideas within it.  Building a culture of experimentation and execution will make it easier to adopt the new business model that works if someone else comes up with it.
The danger signs come if you are going through the first three stages of responding to disruptive innovation: ridicule, aggression, and/or bargaining.  If you’re doing that instead of experimenting, we all know what comes next.
Smash.

 

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Student and teacher of innovation - University of Queensland Business School - links to academic papers, twitter, and so on can be found here.

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10 thoughts on “The Four Stages of Responding to Disruptive Innovation

  1. Thanks Tim. You’re spot on with the self-diagnosis steps (and I love the Fish Called Wanda example!). Exciting times to be at a university!

    This got me thinking about concrete steps universities could take to start meeting this challenge? Should they set up parellel institutional spaces to shield experimentation with the core business model (e.g. Hansen and Birkinshaw’s discussion of Shell’s GameChanges unit)? Should they invest in the organisational slack required for senior execs to come to terms with what’s going on in the MOOCs (e.g. give them the time/resources to enrole in one course). Have you thought about this? What’s your take?

    • Thanks Sam! The problem with parallel spaces is that integrating back into the rest of the organisation will be a huge challenge – I think that it’s probably best to get the experimentation embedded into as much of the university as possible. And more slack is always useful! So I do think that would be a sensible approach too. It’s a tough question though. I know that the main problem right now is that existing universities are simply not trying enough stuff, and the critical issue is figuring out how to best address that.

      • You’d hope that an organisation that contains so many people focused on experimentation would see the sense in that. It’ll be interesting to see what happens as people begin to realise that the platform might just be smoking.