From the 9th to the 14th of December 2021, MBA students immersed themselves in Disruptive Innovation. MBA participant Ernesto Matos shared his experience in 3 articles on LinkedIn, describing the greatest takeaways of the week.
In this article, we have summarised his experience to give readers an idea of what Disruptive Innovation is and why it is so important.
Vijay Govindarajan (VG), one of the world leading innovation experts, identified the importance of being aware of three things when leading innovation and created the 3-box solution:
- Box #3 – Create the future: Focus on the ideas that will transform the business. For the transformation to happen, the leaders need to identify weak signals or changes in the marketplace, empower people that are able to see something new, and test hypotheses with a low-cost, low-risk and fail-fast mentality.
- Box #2 – Selectively abandon the past: the most challenging and important box. Leaders will have to make changes to shift from previous paths and focus time, financial and human resources in creating the future.
- Box #1 – Manage the present: To fund your changes in Box #3 there is a need for stability and flexibility within the business.
These three aspects help start innovation efforts in an organization. But, what changes lead to a good innovation? Ernesto shared with us the four important pillars that determine the effectiveness and success of an innovation, they are:
- Desirability: Do people want it?
- Viability: Will it create profitable growth?
- Integrity: Is it ethical and environmentally conscious?
- Feasibility: Can it be made with existing technology?
Keeping in mind the information on how to lead innovation and make it successful, let’s get into disruptive innovation.
Within disruptive innovation there are two subcategories: low-end innovation and new market innovation. The names already suggest what each one is about, but Ernesto provided us with an explanation for both of them with two very clear examples:
- Low-end disruptive innovation: Holidays come around and we all want to make that trip to visit family or explore new cultures. We start researching ways to travel without compromising comfort. Travelling by bus, train or airplane all have pros and cons. Bus, the journey is cheap but too long. Train is faster but still too long. Flight would be the fastest option, but it’s very expensive. What if there was a way to reduce the cost of flying to target the low-end customer of the travel industry? This is what low-cost airlines set out to solve. They identified the target market who just wanted to get from point A to point B in the fastest and most cost-effective way possible. By providing a flight option that was “good enough”, trimming services for over-served customers, and implementing a new way of operating, low-cost airlines were able to reduce ticket prices and maximize the number of travellers per plane. Thus allowing people who could not afford to fly in the past, to take planes as if they were buses.
- New market disruptive innovation: The primary objective of this innovation is targeting non-consumption. This can be achieved by providing simplicity and convenience to an existing method. This is the case of Tinder, which created a fun and easy-to-use mobile app gamifying the matchmaking process by swiping. This opened the market of young adults and in the first year after launch became the industry leader.
Finally, to finish his thread of articles, Ernesto tells us about how to use these techniques to create a venture with big impact on the world. This is the Jobs to Be Done (JTBD) theory. This is based on the idea that people will buy or use something if they believe they need it but will quickly replace it with something that actually targets their underlying need, the more jobs a product can help a customer get done, the more valuable it will be.
During the course, students had the opportunity to work with stable and disruptive groups to learn one from another. Ernesto’s group had the opportunity to meet and interview Stephanie Hoyle, an EADA alumni from the International MBA class of 2017, who is currently Venture CEO at Farmauna in Peru. Farmauna is an e-pharmacy which offers teleconsultation services that makes healthcare easy and accessible for those who are underserved, predominantly the low income groups. This way, students could learn and understand more about Disruptive Innovation and the way to implement it in a venture idea.