Coatings World - October 2011

Disruptive Events and Innovation

by Phil Phillips, PhD Contributing Editor phillips@chemarkconsulting.net

A look at the
changing landscape
of the coatings
industry past and
present.

Adisruptive technology or disruptive in- novation is an innovation that helps cre- ate a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology there. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in the new market and later by lowering prices in the existing market.

In contrast to “disruptive” innovation, a “ sustaining” innovation does not create new markets or value networks but rather only evolves existing ones with better value, allowing the firms within to compete against each other’s sustaining improvements. Sustaining innovations may be either “discontinuous” (i.e. transformational) or “ continuous” (i.e. evolutionary). Transformational innovations are not always disruptive.

In the Wikipedia definitions they further distinguish transformational from disruptive in the following example.

Although the automobile was a transformational innovation, it was not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles.

The market for transportation essentially remained intact until the debut of the lower priced Ford Model T in 1908 by making higher speed, motorized transportation available to the masses. Eventually, after sustaining innovations within the automotive industry, automobiles displaced horses and their associated busi-

Table 1.

Source: Chemark

nesses. Thus carriage making, horse-trading and saddle repair ceased to be mass, commoditized transportation businesses. (The fact that they still exist as niche markets, e.g., hobby markets, is tangential and immaterial to this main, mass-market displacement.) In fact, the phrase “buggy whip maker” became a popular figurative description of business models (and their technologies) slain by disruptive technologies.

Another example of a disruptive innovation would be rail transportation. Prior to the railroads, goods were hauled to market via horse drawn wagons and, coincidentally, only to markets relatively near to the sources of the hauled goods. Trains could not only haul goods to much further geographical distances but could haul exponentially greater volumes versus its displaced wagon transportation.

Other examples of disruptive technologies can be found in Table 1 below.

Clayton Christensen in “Meeting the Challenge of Disruptive Change” defines a disruptive innovation as a product or service designed for a new set of customers.

“Generally, disruptive innovations were technologically straightforward, consisting of off-the-shelf components put together in a product architecture that was often simpler than prior approaches. They offered less of what customers in established markets wanted and so could rarely be initially employed there. They offered a different package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream.”