(Increased Value of Innovation cont. 2)

Innovation to Shift Direction

It is fundamentally about reorientating the strategy of the business, especially if current strategies are not delivering the desired outcomes. Examples of this include:

- blue ocean (it is the successful creation of a new space that customers (existing and new) value)

- disruptive innovation (it is
"...a process by which a product or service powered by a technology enabler initially takes root in simple applications at the lower end of the market - typically by being less expensive and more accessible - and then relentlessly moves upmarket, eventually displacing established competitors..."
Clayton Christensen as quoted by Tom Hunsaker et al, 2021a

This is expanded to include
"...In which the functioning of the entire industry is changed through the use of next-generation technologies or a new combination of existing technologies..."
Tom Hunsaker et al, 2021a

More examples of disruptive innovation include:

- Aldi (disrupted the UK market by cutting branded products and display costs to deliver price discounts for customers' essentials)

- Virgin (this conglomerate has disrupted industries like travel, entertainment, telephony, credit cards, banking, etc by entering into partnerships with existing providers to secure low-cost access to an infrastructure into which Virgin is able to deliver superior customer experience, usually at lower prices than competitors)

However,
- Elon Musk's Telsa offered a better product and service experience to the luxury end of the market, not the cheaper end.

- Uber launched in San Francisco to serve existing taxi users, rather than appealing to the low-end, unserved customers
"...by offering a substantial improvement over the previous ways of doing business, these companies were able to persuade existing users to switch their allegiances from competitors..."
Tom Hunsaker et al, 2020

NB
"...incumbent companies face the need for a radical change in direction when the dynamics of their industry changes (such as a shift to renewable energy and the ensuring shift to electric vehicles) or due to underperformance of their current strategy. Such pivots are hard for large companies to execute - witness the recent failure of AT&T's efforts to become an integrated media company or GE's failure to establish itself as the leading platform for industrial internet of things..."
Tom Hunsaker et al, 2020

Stresses the requirement to diagnose the nature of its change need and employ the right form of innovation to deliver on it