Disruptive Innovation describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves upmarket, eventually displacing established competitors.
2. D I S R U P T I V E
I N N O V A T I O N
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1
2
3
B U I L D I N G A N
I N N O V A T I O N C U L T U R E
•Inhibitors of disruptive innovation
•Ways in which an innovation culture
can be built
C A S E S T U D I E S
Industry examples based on the
Disruptive Innovation Theory
D E F I N I T I O N O F
D I S R U P T I V E I N N O V A T I O N
D I S R U P T I V E I N N O V A T I O N
T H E O R Y B Y C L A Y T O N
C H R I S T E N S E N
•How it challenges the status quo
•Innovation approaches based on the theory
CONTENT
3. SLIDE /1
DISRUPTIVE
INNOVATION
Definition
...describes a process by which a
product or service takes root
initially in simple applications at
the bottom of a market and then
relentlessly moves upmarket,
eventually displacing
established competitors.
- Clayton Christensen
4. SLIDE /2
Overview
Prof. Clayton Christensen
Harvard Business School
Born: 6 April 1952
DISRUPTIVE
INNOVATION
THEORY
Book written in 1997
Touch Point: How Innovation
Challenges the Status Quo
5. SLIDE /4
What is the demand for
improved product/service
performance over time in an
industry?
Performance
High
Low
TimeEarly… Current
6. SLIDE /5
Demand for better
technological performance
generally increases over
time – irrespective of the
segment they are in
Performance
High
Low
TimeEarly… Current
High
demand
customers
Average
demand
customers
Low
demand
customers
Sophisticated,
Most profitable
7. SLIDE /
SUSTAINING
INNOVATION
LOW-END
DISRUPTION
NEW MARKET
DISRUPTION
Here’s when leading
firms drive
technological
improvements
It is at this level where
disruption takes place
New entrants take
advantage of the gap
created for the over
served customers
New entrants may
target non-consuming
targets with new
market disruptions
INNOVATION APPROACHES BASED ON THE
DISRUPTIVE INNOVATION THEORY
Brief Descriptions
HIGH-END
INTEGRATION
In response to
disruption, Incumbents
tend to resort to High-
end Integration
8. SLIDE /7
SUSTAINING
INNOVATION
Here’s when leading firms
drive technological
improvements
Performance
High
Low
TimeEarly… Current
Sustaining
innovation
1.
High demand
customers
Average demand
customers
Low demand
customers
10. SLIDE /9
LOW-END
DISRUPTION
It is at this level where disruption
takes place
New entrants take advantage of
the gap created for the over served
customers
Performance
High
Low
TimeEarly… Current
Sustaining
trajectory
High demand
customers
Average demand
customers
Low demand
customers
Low-end
disruption
New firms enter with disruptive
technologies and start a new
trajectory with a new business
model
New firms move upmarket and
eventually dominate the mainstream
market when they meet
performance requirements
2.
11. SLIDE /10
NEW MARKET
DISRUPTION
New entrants may target non-
consuming targets with new
market disruption
Time
Non-
Consuming
market
New market
disruption
3.
12. SLIDE /11
HIGH-END
INTEGRATION
In response to disruption,
Incumbents tend to resort to
High-end Integration
Performance
High
Low
TimeEarly… Current
High demand
customers
Average demand
customers
Low demand
customers
High-end
integration
4.
14. SLIDE /12
Market Research Sector
Disruption in the market research sector
in Kenya
Performance
High
Low
TimeEarly… Current
Tier 1
clients
Tier 2
clients
Tier 3
clients
High-end
integration
Low-end
disruption
16. SLIDE /
Start
90s…
Technological advancements are
taking place at a fast pace and this
requires companies to adapt
quickly
EARLY
90S
Early Mobile Banking
Offered over SMS
No internet required
“Pull” services offered
EARLY
2000S
Mobile Web
Introduction of Smartphones
with WAP support enabling use
of mobile web
“Push” SMS services-account
alerts sent automatically
2010
ONWARDS
Introduction of Mobile
Banking Apps
Rapid growth of
android based banking
apps
14
17. SLIDE /
October - December
15
Ongoing
2018…
THE FUTURE AND BEYOND
Beyond mobiles, towards wearables
Wearables are capable of providing a
number of push opportunities to
Financial Institutions worldwide
So as to delight and surprise customers,
augmentations of products and services
have to be done continuously
18. SLIDE /16
INHIBITORS OF
DISRUPTIVE
INNOVATION
The “Adoption” Barrier
• Over reliance on existing designs
• Organizational structure
• Excessive bureaucracy
• Shifting the status quo
The “Mindset” barrier
• Inability to unlearn
• Lack of distinctive competencies
• Obsolete mental models
The “Risk” barrier
• The learning trap
• Lack of realistic ROI expectation
• High risks and uncertainty
• Risk averse climate
The “Nascent ” Barrier
• Lack of creativity
• Lack of market sensing and foresight
• Innovation process mismanagement
The “Infrastructural” barrier
• Lack of mandatory infrastructure
• Lack of adequate follow through
19. SLIDE /17
BUILDING
AN
INNOVATION
CULTURE
• Foster cross functional involvement to spur idea
sharing (have a diverse team work together)
• Be open to suggestions so as to build an
atmosphere where employees can give their input
• Have a reward/feedback system where innovators
get feedback on their work and million-dollar ideas
get rewarded/recognition
• Have a system that will enable idea sharing i.e. less
bureaucratic procedures (having innovators bypass
hierarchies)
• Have innovation treated as a key resource of
economic growth i.e. having an innovation
unit/department
20. SLIDE /18
• Set up workshops specifically for idea
generation/brainstorming
• Take consideration of both future-growth
innovations as well as incremental ones
• Outline clear objectives as this will lead to more
creative ideas directly linked to the objectives
• Encourage mistakes/risk taking as it’s part of the
creative process
• Implement a rotating culture as it allows
employees to step out of their comfort zones
which could lead to sparking of new ideas
BUILDING
AN
INNOVATION
CULTURE