This document discusses the importance of disruptive innovation for organizational success. It defines disruptive innovation as innovation that creates new markets by meeting customer needs in new ways. In contrast, sustaining innovation focuses on incremental improvements in existing markets. The document argues that organizations need to embrace disruptive innovation to gain first-mover advantages like new customer bases and brand recognition. It provides examples of disruptive innovations like whey protein powder and Advil. Finally, it discusses how organizations can support disruptive innovation through metrics, leadership, culture and ideation processes.

1. 1
THE CASE FOR
DISRUPTIVE
INNOVATION

2. INNOVATION IS THE
CATALYST THAT PROPELS
ORGANIZATIONAL SUCCESS

3. 3
“10-30% OF AN INNOVATION PORTFOLIO SHOULD
FOCUS ON DISRUPTIVE INNOVATION.”
- A. G. LAFLEY, FORMER CEO OF P&G

4. Small changes are not enough in today’s hyper-competitive
business environment.
New regulations, tougher competitors, and changing
consumers are impacting the way organizations do business.
Organizations will need to change the game; in their industry,
for their customers and consumers, and in their culture.
LET’S DISRUPT THE WAY
ORGANIZATIONS INNOVATE.

5. 5
01 02 03 04
DISRUPTIVE VS
SUSTAINING
INNOVATION
WHY ORGANIZATIONS
NEED TO EMBRACE
DISRUPTIVE
INNOVATION
BEING DISRUPTIVE
– STORIES OF
INNOVATION
HOW DO
ORGANIZATIONS
SUPPORT
DISRUPTIVE
INNOVATION?
TABLE OF CONTENTS

6. Innovation comes in two forms. Both types
of innovation are vital to maintaining a
competitive edge in the marketplace but,
in order to attain unanticipated growth,
disruptive innovation is required.
01
DISRUPTIVE VS.
SUSTAINING INNOVATION
Disruptive Innovation
Sustaining Innovation
1
Source: Christenson, Clayton. The Innovator’s Solution, 2003.

7. 7
Re-define or establish new markets by looking
at customers/consumers, products, and business
models in an entirely new way. True disruptive
innovations offer new forms of revenue with minimal
competition at the start; as a result there is room for
ample growth.
While they are rare, disruptive innovations increase
the odds of creating a successful growth businesses
by 30%.1
Whey protein powder
Advil
Netflix
Enhance a company’s current business performance
and market success by making incremental
improvements upon known market offerings. These
are those “year-by-year” improvements made by
most good companies (e.g., many line extensions).
Sustaining innovations seek to compete in
established markets with offerings that offer little
differentiation. Enhancing profit margins is the name
of the game.
Flavor or fragrance changes
iPad Mini

8. There are many benefits of being a first-mover in the
market – a new consumer base, brand recognition,
and a market lead. Disruptive innovation allows for an
organization to be a first-mover, not a fast-follower.
02
WHY ORGANIZATIONS NEED TO
EMBRACE DISRUPTIVE INNOVATION.

9. 9
The Disruptive Innovator is
first to enter the market. This
innovator sees exponential
growth over time.
Disruptive Innovator
“First Mover”
The Sustaining Innovator enters
into this new market late. Even
though the offering may be
better than all other competitors,
there is less opportunity to grow.
Sustaining Innovator
“Fast Follower”
VALUE
TIME
Source: Rogers, Everett. Diffusion of Innovations, 1962.

10. 03
BEING DISRUPTIVE -
STORIES OF INNOVATION
WHEY, a byproduct of the
manufacturing of cheese, contains
protein, lactose, and fat. Although the
protein within whey has been known
to reduce the risks of heart disease,
cancer, and diabetes, many felt whey
contained too much sugar and
cholesterol to be consumed regularly.
In the 1940’s, mass
production of dairy
led to an excess of
whey, which had no
commercial value,
and the whey went
into rivers and
animal feed.
Meanwhile, body builders
were discovering the
on muscle gain. For many
years, the small community
relied on bitter-tasting or
fat-filled supplements to
boost their performance.
WHEY
PROTEIN
POWDER
WATER
WHEY
SUGARS
FATS
PROTEINS
– =
WHEY
WHEY

11. 11
IN WHAT WAYS WAS WHEY PROTEIN INNOVATIVE
Whey protein was a good-tasting, easily-digestible, healthy protein versus the
bitter or fat-filled supplements the fitness industry was originally using.
Whey protein innovators utilized new separation technologies to separate whey
protein out of the remaining less-healthy components of whey.
Whey was used in disease prevention, but Next Nutrition used additional
benefits of the product to capitalize on the needs of a growing fitness industry.
In 1993, Next Nutrition focused
their attention on a protein now
available because of new
separation technologies: whey
protein. Compared to previous
body building supplements, whey
protein was tasty,
easily-digestible, and healthy.
Once whey protein became
available, demand for it
expanded. Next Nutrition
capitalized on a growing
interest in fitness and
bodybuilding in the general
population to make whey
protein a booming business.
Currently, whey
powder, proteins, and
protein factions have
global sales in excess
of $5 billion and
projected sales of
$6.4 billion by 2014.
$6.4
BILLION
BY 2014
I want
WHEY!

12. Within a year, 100 million
people had been treated by
ibuprofen in over 120 countries,
and manufacturing couldn’t
keep up with the demand.
EUREKA!
BEING DISRUPTIVE -
STORIES OF INNOVATION

13. 13
By 1988, the
improvements
resulted in production
of over two million
Advil tablets per day.
OTC
100M People in
120 Countries
LOOK,
NO HANDS!
IN WHAT WAYS WAS ADVIL INNOVATIVE
Advil was the first over-the-counter ibuprofen. It was also more effective than
other pain-killers at the time and produced fewer side effects.
Advil expanded its customer base from rheumatoid arthritis patients to anyone
with pain, resulting in millions of new customers.
Michael Dryden and his team developed an automated manufacturing process
to keep up with the growing demand of Advil.

14. 04
HOW DO ORGANIZATIONS SUPPORT
DISRUPTIVE INNOVATION?
Often, innovation metrics drive behavior
to produce more and more sustaining
innovations, leading to SKU proliferation.
Metrics that focus on disruptive innovation
are required.
THE RIGHT METRICS / TARGET
Ex. 20% of innovations from the ideation process
should be categorized as disruptive.
Organizations must adopt a mindset of learning and adapting in order to set the right
strategy, metrics, processes, teams, and culture enable delivery against its growth
targets. These changes will lead to behaviors across the organization that support
disruptive innovation.
1

15. 15
Leadership must champion
the idea of disruptive
innovation as the driver
of success and brand
recognition.
SUPPORTING
LEADERSHIP
Ex. Incorporate disruptive
innovation into the annual
strategic plan and personal
leadership objectives.
The organization must
promote innovation-friendly
skills. Disruptive innovation
relies on people with both
discovery (to identify the
opportunity) and delivery
(to execute the business
concept) skills.
INCENTIVIZE
THE RIGHT
BEHAVIORS
Ex. Incentivize skills such
as associating, questioning,
challenging the status quo,risk
taking, networking, observing,
and experimenting.*
Encourage different
thinking patterns by
adjusting the ideation
process.
RE-INVENT THE
INNOVATION
PROCESS
We have included best
practice approaches to the
innovation process on the
following pages.
2 3 4
*Source: Dyer, Gregersen, Christensen. “The Innovator’s DNA”, The Harvard Business Review, Dec. 2009.

16. Strong insights are often stimulus enough to inspire a steady stream of creative ideas.
Applying the four “lenses” of innovation to an ideation process allows innovators to
see the same world from diverse perspectives.
DISCOVER INSIGHTS AND INNOVATION VECTORS
STRATEGIZE
Identify
Innovation
Goals and
Guardrails
Generate
Discovery
Insights
Translate
Insights to
Innovation
Vectors
Build
Innovation
Strategy
Around
Vectors
IDEATE
EXECUTE

17. 17
Be the contrarian. Orthodoxies are the mindsets that become ingrained in
the way companies and industries do business. Disruptive innovators break
the mold; they find new, unexplored pathways to what drives success.
Disruptive innovators spot the patterns of trends that no one else noticed.
They take seemingly unrelated data and infer connections that can be used
to change the rules of competition and create new opportunities.
Disruptive innovators are able to get inside the customer’s skin; they can
translate the customer’s thoughts and feelings into needs that even the
customer could not identify.
Redefine your company as a pool of diverse skills, knowledge and
experience rather than a maker of things. Disruptive innovators can generate
new opportunities by understanding the individual skills and assets in their
company and by bringing together the right people.
Challenge
Orthodoxies
Harness
Market
Trends & Dis-
continuities
Leverage
Competencies
Discover
Unarticulated
Needs
Source: Gibson, Rowan. Innovation to the Core, 2008.
LensesofInnovation

18. GENERATING THE RIGHT IDEAS
Innovative ideas are not just a new product or service in the marketplace. Innovation can
occur in processes and approaches to the marketplace too.
When generating and filtering ideas, it is important to encourage ideas that encompass
different ways of innovating.
CUSTOMERS
Find benefits of
the offerings that
would satisfy the
needs of new
customers
CUSTOMER
EXPERIENCE
Enhance customer
interaction at all
points of contact
with the company
VALUE CAPTURE
Re-think the
business model
of capturing
revenue
PROCESSES
Re-design
core operating
processes for
greater efficiency
and effectiveness
ORGANIZATION
Re-think the
scope of the
company’s
functions and
activities
SUPPLY CHAIN
Change how the
offerings get to
the customer

19. 19
PRESENCE
Create new
places where
offerings can
be bought by
customers
NETWORKING
Enhance
information
transfer through
technological
innovations
BRAND
Re-define the
core promises of
a company into
new areas
OFFERINGS
Create new
products and
services that
address needs of
customers
PLATFORM
Streamline
development of
offerings through
use of a common
factor
SOLUTIONS
Create integrated
offerings to
address the
customer’s
needs.
Source: Sawhney, Wolcott & Arroniz. “The 12 Different Ways for Companies to Innovate”, MIT Sloan Management Review, Spring 2006.
STRATEGIZE Frame
Ideation
Initiative
Get Smart
Gap Analysis
Generate and
Prioritize
Ideas
Develop
Concept
IDEATE
EXECUTE