Discontinuous Innovation Examples, Definition, Benefits and Risks

Stefan F.Dieffenbacher

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21 min read

Innovation serves as the bedrock for growth and adaptability. Innovation Entrepreneurs, as they explore various types of innovation to meet their objectives, must adeptly navigate the complexities of discontinuous innovation. This intricate process is instrumental in shaping a well-defined innovation strategy that becomes a cornerstone for sustained success.

Discontinuous innovation represents a radical departure from established norms, introducing transformative changes that have the potential to reshape entire industries. While continuous innovation serves to sustain and refine, discontinuous innovation operates on a different scale, reshaping industries and introducing significant shifts in a shorter timeframe. A well-balanced approach often incorporates both strategies, adapting to market dynamics and aligning with specific business goals.

For organizations traversing the dynamic landscape of continuous and discontinuous innovation, Innovation consulting proves to be indispensable. At Digital Leadership, we provide strategic guidance through our Innovation consulting services, facilitating continuous improvements by identifying market trends and effectively managing associated risks. Our Innovation Blueprint service serves as the inaugural phase, conducting a meticulous assessment of existing innovation practices and seamlessly integrating them into the overarching business strategy.

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What is Innovation?

Innovation, the catalyst for progress, encompasses the creation and application of original ideas, processes, products, or services that bring about positive transformations. As the vital force driving advancement, innovation propels organizations forward, allowing them to seize opportunities in an ever-changing market. Cultivating an innovation culture within an organization enhances this dynamism, promoting a mindset that esteems creativity, experimentation, and adaptability, thereby fostering sustained progress and success.

It involves doing so with a business purpose, relevance, and strategic intent. Innovations become cornerstones upon which businesses build their competitive advantage, shaping industries and carving unique identities in the market. Innovation is all about meeting the evolving needs and expectations of customers and bringing value to society, jobs to be done theory is a popular approach that can help achieve this goal. By identifying the specific jobs customers hire products or services for, businesses can develop more effective and customer-focused solutions.

 The “Jobs-to-be-Done” framework recognizes that customers “hire” a product or service to get a job done in their lives. Understanding these jobs and designing solutions that address them is integral to successful innovation. It shifts the focus from merely improving products to solving specific customer problems, providing a more targeted and customer-centric approach.

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Much more about Jobs to be done and innovation approaches, you will find in our book “How to Create Innovation”. Recognizing that innovation is a dynamic process, this guide emphasizes adaptability. Stay ahead of the curve by understanding how innovation strategies evolve with market dynamics, ensuring sustained relevance and competitiveness.

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What is Discontinuous Innovation?

Discontinuous innovation is characterized as a form of innovation that brings about substantial changes, often giving rise to new markets or displacing existing ones. It encompasses the creation of novel products, services, or business models that fundamentally transform industry or sector practices.

Discontinuous innovation definition is a radical departure from established norms, ushering in transformative changes that have the potential to reshape entire industries. Unlike incremental improvements seen in continuous innovation, discontinuous innovation introduces groundbreaking concepts, technologies, or approaches that may render existing products or services obsolete. This type of innovation often involves a higher degree of risk and uncertainty but can lead to significant leaps in performance, efficiency, and customer value. Successful examples of discontinuous innovation include the advent of personal computers, the internet, and more recently, the emergence of blockchain technology. Embracing discontinuous innovation requires organizations to foster a culture that embraces risk, encourages experimentation, and swiftly adapts to the dynamic landscapes of emerging markets.

The Business Model Canvas serves as a crucial planning and assessment tool for discontinuous innovation. It allows organizations to identify potential gaps in their existing model that may be disrupted by innovation, assess new opportunities, and align the proposed changes with the core value proposition.

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Discontinuous Innovation Examples

Take the example of electric cars entering the automotive industry, challenging traditional combustion engines and reshaping the entire transportation sector.

1) Smartphones:

The introduction of smartphones revolutionized the telecommunications industry, creating entirely new markets for mobile applications, mobile internet, and transforming the way people communicate and access information.

Real-life company examples: Apple

The introduction of the iPhone by Apple in 2007 marked a seminal moment in the smartphone industry. The iPhone’s innovative design, user-friendly interface, and the App Store ecosystem not only transformed Apple into a tech giant but also set the standard for modern smartphones, influencing the entire telecommunications industry.

2) Blockchain Technology:

Blockchain, the decentralized and secure ledger technology, introduced a discontinuous innovation with applications beyond cryptocurrencies. It has the potential to revolutionize various industries, including finance, supply chain, and healthcare.

Real-life company examples: IBM (International Business Machines Corporation):

IBM has been a pioneer in exploring blockchain technology beyond cryptocurrencies. Through its IBM Blockchain platform, the company has implemented blockchain solutions for various industries, including supply chain (IBM Food Trust), finance (IBM World Wire), and healthcare (IBM Blockchain for Healthcare).

3) Artificial Intelligence (AI):

The integration of artificial intelligence into various industries, from healthcare to finance, represents a discontinuous innovation, automating tasks, and decision-making processes with far-reaching implications.

Real-life company example: Google (DeepMind):

Google’s subsidiary, DeepMind, is a prime example of the integration of AI into healthcare. DeepMind’s AI technology has been applied to analyze medical data for more accurate diagnoses and treatment recommendations. Their work includes projects like predicting patient deterioration and improving the efficiency of healthcare delivery.

Benefits of Discontinuous Innovation

Discontinuous innovation, while often involving higher risk and uncertainty, can bring about numerous benefits for organizations willing to embrace and navigate the transformative changes it introduces. Here are some key benefits:

1. Market Leadership and Differentiation:
   • Discontinuous innovation has the potential to catapult organizations into market leadership positions by introducing groundbreaking products, services, or business models that set them apart from competitors.
2. Creation of New Markets:
   • Discontinuous innovation can create entirely new markets or industries, providing organizations with the opportunity to be pioneers and capture untapped customer segments.
3. Competitive Advantage:
   • Organizations that successfully implement discontinuous innovation gain a competitive advantage by offering unique and unprecedented solutions, making it challenging for competitors to replicate or catch up.
4. Customer Attraction and Retention:
   • Innovations that significantly deviate from the norm can attract new customers and retain existing ones who seek novel and cutting-edge solutions, enhancing customer loyalty and engagement.
5. Revenue Growth:
   • Successful discontinuous innovations can lead to substantial revenue growth as organizations capitalize on new markets, expanded customer bases, and increased demand for revolutionary products or services.
6. Brand Reinforcement:
   • Implementing discontinuous innovations reinforces a brand’s image as an industry leader and innovator. It can enhance brand perception and contribute to long-term brand value.
7. Economic Impact:
   • Discontinuous innovation can have a broader economic impact by driving economic growth, creating new jobs, and fostering an environment of technological and industrial advancement.
8. Adaptability and Future-Proofing:
   • Organizations that regularly engage in discontinuous innovation develop a culture of adaptability. This mindset positions them to navigate future uncertainties and proactively respond to evolving market dynamics.
9. Strategic Positioning:
   • Discontinuous innovation allows organizations to strategically position themselves for the future by staying ahead of emerging trends, technologies, and changing customer preferences.
10. Increased Organizational Resilience:
    • Embracing discontinuous innovation builds organizational resilience by instilling an ability to adapt to unexpected challenges and disruptions, making the organization more robust in the face of uncertainties.

Risks of Discontinuous Innovation

Discontinuous innovation, while offering significant potential benefits, also comes with inherent risks and challenges. Understanding and managing these risks is crucial for organizations considering or implementing radical changes. Here are some key risks associated with discontinuous innovation:

1. Market Acceptance and Adoption:
   • Risk: There is a risk that customers may not immediately accept or adopt the new, radically different product or service.
   • Challenge: Overcoming consumer resistance and educating the market about the value and advantages of the innovation can be a substantial challenge.
2. Uncertain Return on Investment (ROI):
   • Risk: Investments in discontinuous innovation may have an uncertain or delayed ROI.
   • Challenge: Organizations may face financial challenges and pressure from stakeholders if the innovation does not yield anticipated results within expected timelines.
3. Technological and Execution Risks:
   • Risk: The implementation of radical technological changes may encounter unexpected technical challenges.
   • Challenge: Managing and mitigating technological risks requires robust research, development, and execution strategies.
4. Competitive Response:
   • Risk: Competitors may respond quickly and effectively to discontinuous innovation, nullifying the organization’s competitive advantage.
   • Challenge: Anticipating and responding to competitive reactions is critical to maintaining a leadership position in the market.
5. Organizational Resistance:
   • Risk: Internal resistance from employees who may be accustomed to existing processes or technologies.
   • Challenge: Overcoming resistance requires effective change management, communication, and a supportive organizational culture.
6. Regulatory and Compliance Issues:
   • Risk: Discontinuous innovations may face regulatory challenges, especially if they challenge established norms or safety standards.
   • Challenge: Organizations must navigate regulatory landscapes, ensuring compliance while advocating for necessary changes in regulations that may hinder innovation.
7. Supply Chain Disruptions:
   • Risk: Radical changes in products or services may disrupt existing supply chains.
   • Challenge: Ensuring a smooth transition and addressing potential disruptions in the supply chain is essential for the successful implementation of discontinuous innovation.
8. Cost Overruns:
   • Risk: Development and implementation costs may exceed initial estimates.
   • Challenge: Organizations must closely manage budgets, monitor expenditures, and be prepared to adapt to unforeseen cost challenges.
9. Brand Perception and Trust:
   • Risk: If not communicated effectively, discontinuous innovation may impact the perceived reliability and trustworthiness of the brand.
   • Challenge: Maintaining transparent communication and managing perceptions are vital for preserving brand trust during periods of radical change.
10. Cultural and Organizational Impact:
    • Risk: Introducing disruptive changes may create internal cultural challenges.
    • Challenge: Nurturing a culture that embraces change, encourages innovation, and addresses employee concerns is crucial for long-term success.

Discontinuous Innovation Process Implementing Steps

The discontinuous innovation process involves a series of strategic steps aimed at introducing radical changes that can reshape industries or create entirely new markets. Here is a step-by-step guide to the discontinuous innovation process:

1. Identify Strategic Objectives:
   • Clearly define the organization’s strategic objectives and long-term goals. Understand the need for radical change and how it aligns with the overall vision and mission.
2. Establish Innovation Leadership:
   • Appoint a dedicated innovation leadership team or designate innovation champions within the organization. This team should have the authority and resources to drive radical changes.
3. Environmental Scanning and Trend Analysis:
   • Conduct a thorough analysis of the external environment, including market trends, technological advancements, regulatory landscapes, and emerging consumer preferences. Identify potential disruptors and opportunities.
4. Market Research and Customer Insights:
   • Gather deep insights into customer needs, pain points, and unmet desires. Understand the evolving expectations of the target audience to inform the innovation process.
5. Idea Generation and Exploration:
   • Encourage a culture of creativity and ideation within the organization. Host brainstorming sessions, innovation workshops, and leverage cross-functional teams to generate a pool of radical ideas.
6. Concept Development and Evaluation:
   • Develop concepts based on the generated ideas. Evaluate these concepts against strategic objectives, market needs, and potential for disruptive impact. Select concepts that align with the organization’s goals.
7. Prototyping and Testing:
   • Create prototypes or pilot programs for the selected concepts. Test these prototypes internally and, if possible, with a select group of external stakeholders to gather feedback and identify areas for improvement.
8. Refinement and Iteration:
   • Based on feedback, refine and iterate on the prototypes. Continuously improve the concepts to address any identified shortcomings or challenges.
9. Resource Allocation and Planning:
   • Allocate necessary resources, including financial, human, and technological resources, for the full-scale implementation of the chosen concept. Develop a detailed project plan and timeline.
10. Implementation and Launch:
    • Execute the full-scale implementation of the discontinuous innovation. This may involve launching new products, services, or business models. Ensure a comprehensive marketing and communication strategy to introduce the innovation to the market.
11. Monitor and Measure:
    • Implement a robust monitoring and measurement system to assess the performance and impact of the discontinuous innovation. Track key performance indicators (KPIs) and gather data for continuous improvement.
12. Adapt and Evolve:
    • Be prepared to adapt and evolve based on real-time feedback and changing market dynamics. Discontinuous innovation is an ongoing process that may require adjustments and refinements over time.
13. Learn from Failure:
    • Embrace the possibility of failure as part of the innovation process. Learn from any setbacks and use them as opportunities for improvement in future innovation initiatives.
14. Cultural Integration:
    • Foster a culture within the organization that values and supports discontinuous innovation. Ensure that employees are encouraged to contribute ideas, take risks, and embrace change.
15. Knowledge Transfer:
    • Capture and transfer knowledge gained from the discontinuous innovation process throughout the organization. Share insights, best practices, and lessons learned to enhance future innovation initiatives.

Establishing a reliable discontinuous innovation process demands a strategic approach, and The UNITE Innovation Approach is a valuable resource in this journey. It not only structures the innovation process but also facilitates the creation of meaningful networks and maximizes the potential of intellectual property.

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Types of Innovation Relation with Discontinuous Innovation

The four types of innovation —disruptive, architectural, incremental, and radical—reflect different approaches to introducing change within an organization. Let’s explore each type and its relationship to discontinuous innovation:

1. Disruptive Innovation:
   • Definition: Disruptive innovation involves the introduction of a new product or service that initially appeals to a niche market but eventually disrupts and reshapes an entire industry.
   • Relation to Discontinuous Innovation: Disruptive innovation is a subset of discontinuous innovation. It introduces significant changes that can potentially disrupt existing markets and business models, causing a shift in industry dynamics.
2. Architectural Innovation:
   • Definition: Architectural innovation refers to changes in the overall design or organizational structure of a product, system, or process. It often involves reconfiguring existing components in a novel way.
   • Relation to Discontinuous Innovation: Architectural innovation can be part of both continuous and discontinuous innovation. In the context of discontinuous innovation, it may involve reimagining the fundamental structure of a product or system.
3. Incremental Innovation:
   • Definition: Incremental innovation involves making small, gradual improvements to existing products, services, or processes. It is a step-by-step approach to innovation.
   • Relation to Discontinuous Innovation: Incremental innovation is distinct from discontinuous innovation. While discontinuous innovation introduces radical changes, incremental innovation focuses on steady, continuous improvements without fundamentally altering the core.
4. Radical Innovation:
   • Definition: Radical innovation involves the development of entirely new products, services, or processes that significantly depart from existing ones. It represents a departure from established norms.
   • Relation to Discontinuous Innovation: Radical innovation is synonymous with discontinuous innovation. It introduces groundbreaking concepts, technologies, or approaches that can reshape industries and create entirely new markets.

Overall Relation:

• Discontinuous Innovation Encompasses Them All: Discontinuous innovation serves as an umbrella term that includes disruptive innovation, architectural, incremental, and radical innovations. It represents a holistic approach to innovation that acknowledges the potential for both incremental improvements and radical shifts within an organization.

In essence, each type of innovation plays a role in an organization’s overall innovation strategy. While some types are more closely aligned with discontinuous innovation, others contribute to a more balanced and comprehensive approach to staying competitive and relevant in the market.

Conclusion

In conclusion, discontinuous innovation stands as a powerful force driving radical change within organizations and industries. It represents a departure from the status quo, introducing transformative shifts that have the potential to reshape entire markets. The distinctive features of discontinuous innovation, including its radical nature, shorter time horizon, and higher inherent risks, set it apart from the more gradual and incremental process of continuous innovation.