Innovation is inherently risky, especially in today’s fast-paced marketplaces. Traditional innovation proceeded slowly: First, find out what causes the customer pain. Next, experiment with different technologies and market sectors to develop a new product. Then, build models and test prototypes with potential customers to study acceptance and pricing strategies. Finally, move into a planned product launch addressing early adopters through laggards in sequence.
True innovation is extremely rare. Business innovations often involve more than simple novelty. Innovation requires a confluence of customer needs being met with novel technologies and competitive marketplaces that are receptive to the new product or service. Invention alone does not make an innovation.
Traditional innovation is now a notation in the history books. In a recent article in Harvard Business Review (March 2013), Larry Downes and Paul Nunes coin the term “big-bang disruption” to describe innovation in our fast-paced, interconnected world. Rather than marketing a well-tested new product to a sequence of market segments, innovation are tested en masse and survivors garner windfall earnings. Big-bang disruptors can seemingly come out of nowhere and beat the competition in the blink of an eye.
While traditional disruptive innovation focused on the low-end customer who previously did not participate in the market, big-bang disruptors combine existing technologies and services to offer new and innovative products and service. Consider, for example, Amazon’s ability to capture 20% of all book sales revenue by combining existing web and pioneering e-book technologies in a new way. And to think the Kindle was not even introduced until 2007!
An essential component of all innovation is experimentation. The difference with big-bang disruption is the speed and number of experiments. Because the cost is trivial, innovators run many experiments in parallel and in live markets. Technology makes these multiple, concurrent experiments possible and technology can make a successful innovation turn into a very, very successful product.