Analysing The Critical Changes Within An Industry Business Essay


This is very uncommon phenomena in business world to face the similar nature of changes each time. According to Bessant (2007) "History tells us that when technologies shift, new markets emerge, the regulatory rules of the game move or someone introduces a new business model then established players can suddenly become vulnerable" ( Bessant, 2007 p.223). This shows that each time businesses are found in threat from outside competitors or disruptive innovations. First we will define innovation as "a specific tool of entrepreneurs, the means by which they exploit change as an opportunity for a different innovation or service, it is capable of being presented as discipline, capable of being learned, capable of being practiced" (Bessant, 2007 p.11). It is a challenging matter for all businesses to keep the innovations inside the industry. The importance of innovation can be measured with this statement "Companies that do not invest in innovation put their future at risk. Their business is unlikely to prosper, and they are unlikely to able to compare it they do not seek innovative solutions to emerging problems (Bessant, 2007 p.5). Now the question is that, in which dimension innovation will occur and what kind of innovation will occur. We will find the most important of all innovations and their consequences for competing companies and their customers. To accomplish this task successfully literature from Bessant and Tid (2007) along with scientific articles are used to describe in detail disruptive innovation and their impact on business.

Literature Review

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Most of the changes took place in one of the mentioned 4 Ps dimensions i.e. product innovation, process innovation, position innovation and paradigm innovation (Bessant, p.13, 2007). But these dimensional changes are associated with incremental innovation or sometimes radical innovation. From the article Hang and Chen (2008) agree with incremental/continuous innovation for companies to fulfill the needs of current customers and gain continuous growth in the market, but also stress on the need of discontinuous innovation after time intervals because it have high chances to be successful at the time when emerging local enterprises. An example from article show some well known companies like IBM, GE, Motorola, HP, Siemens, Philips, 3M, United technologies, General Motors that they emphasis on regular basis to have incremental innovations and radical innovations. Hang and Chen (2008) also put radical innovation in the discontinuous innovation family and conclude that disruptive innovation is "an effective approach for creating new, affordable products/services for the un-served mass markets in developing countries" (Hang and Chen, 2008). In contrast recent research show that radical innovation have high percentage of failure rate in new product/service creation and require considerable time, capital amount and attention from senior managers (Hang and Chen, 2008). Where as a thorough analysis from the article reveals that several large enterprises were initially established due to the disruptive innovation while keeping in mind that huge radical innovations have been found in failure rather than success (Hang and Chen, 2008). Disruptive technologies persuade new customers to use a small, cheaper and simpler to use products. "For disruptive technologies to succeed, two conditions must be satisfied. First, there must be performance overshoot in the mainstream market, causing customers to be over-served. This occurs frequently in high-tech products/services as competitors intensify their R&D and try to be the first to introduce new features to satisfy the high-end market needs. Second, incumbents must be attracted to higher-end/higher-margin markets, hence willing to run away when attacked from below" (Hang and Chen, 2008). Competition in the main market cause to find out what customers need? So customers rapidly change to new technologies at that time when disruptive technology performance reach to mainstream market performance as shown bellow in the figure1.

There are a number of examples for disruptive innovations in each field i.e. (home appliance, wireless communications, energy etc) to be discussed but here we can take the case of SONY which developed the first portable T.V and some other affordable consumer products by replacing transistors instead of vacuum tubes. RCA and Westinghouse did efforts to adopt the new technology in some of their products like table top radios, floor standing TVs, and old generation digital computers but could not achieved success limits because they viewed transistors just as a sustaining , radical technology. In contrast Sony took competitive advantage of this new innovation and invented the ever first pocket radio by implementing transistors technology. Later on the same innovation was adopted by Sony to invent portable TVs.

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From market perspective disruptive innovation is helpful for both, established companies and new entrepreneurs to launch a new product at low cost in the market. Before gaining huge market shares, attempts are mad to provide affordable products for underserved customers but as soon as high market shares are gained and company assures a disruptive foothold in the market then a sustaining incremental and/or radical innovation is required to serve higher end customers across the globe. (Hang and Chen 2008) A strategy so called "targeting the bottom of bottom" by Christensen et al. (2004) indicate that companies need to hunt for eager customers who are not yet currently consumers. This will result rapid growth in economic position for developing countries ( Hang and Chen 2008; Christensen et al. 2004). According to Bessant, p. 234 (2007) opportunities and threats are the two offers brought by Disruptive innovations for established and new players. Furthermore " for new entrants it is the 'classic' entrepreneur's challenge of being able to manage the growth of a business from a bright but often high risk idea-and doing it from a weak asset base. For established players the challenge is one of re-inventing themselves to allow at least a part of the business to behave as if it were an entrepreneurial start up" (Bessant, p.234, 2007). Christensen also extremely recommends disruptive innovations for new entrants and established players because this approach offers alternative and powerful development for affordable products to the customers. But in response to this Hang and Chen (2008) oppose constant disruptive innovation for those companies which were founded due to disruptive innovation and they are in a position to grow on continuous /incremental base innovations. So in conclusion, senior management team of a company needs to develop a dual culture of innovation policy i.e. sustaining and disruptive for the continuous growth in market and satisfy customer's needs.