Disruptive Innovation is About Determining the How…Defining the What is Easy!

Why do consumers buy?
Consumers dictate the “why” of consumerism. Whether consciously or not, they make buying decisions based upon a perception of value that comprises the net worth, to themselves or someone else, of aggregated product attributes. Established categories have spent years defining and reinforcing the overall value proposition for their consumers and building characteristics and functionality into products that promise those valuable attributes.

What is R&D selling?
Born of the pressure to keep a small step ahead of the competition, most R&D organizations spend upwards of 90% of their efforts and budgets pursuing incremental functional and cost improvements to enhance already defined value attributes. At first this is a solid recipe for sustaining the business, but with the ultimate result being a slow competitive race to the bottom as once-differentiated products become commodities. Conversely, long-term success relies upon R&D support of long-term sustainable growth punctuated with market and category disruptions fueled by innovative transformations to products and services. This means that to grow you must change the game (the value equation) rather than just tweak the rules!

“How” we provide for the needs of the consumer represents the opportunity for product and service transformations.
By innovating the “how” it is possible to both address new consumer reasons to buy, and dramatically change the consumer’s perception of value. And here is the shocker—we can be systematic about doing it! Indeed, the left brain of R&D is well suited to this. When we are systematic we change the odds of success in our favor. One tool we can use to do this is the Consumer Value S-Curve—a representation of the value lifecycle of a product. As a product develops and matures over time, or relative to invested development efforts, the value it delivers to the consumer increases reliably and non-linearly, and that change in value over time typically depicts an S.

1stGraph

When different product systems serve the same overall needs of a consumer they can be compared to one another as a family of curves—the value they each deliver depending upon the perception of value of the specific consumer segment (or individual).
The use of S-curves to indicate the functional advancement of technologies, or to illustrate market penetration of a product or category, is not new. However, the real R&D utility lies in using S-curves to direct our innovation strategy in a category by focusing outwardly on the consumers value perception rather than focusing inwardly on the viewpoints of technology and commerce. Representing a category as a family of consumer value S-curves—each a representation of the way in which consumer needs are satisfied with different technological systems doing similar jobs but leveraging different mechanisms—provides a simple and consistent visual comparison that allows us to apply some scientific rigor to the question of “how” to innovate a product category

2ndGraph

For example, consider durable (persistent) image capture systems since the paintbrush and paint, and suppose that consumer perceived value is dominated by image quality, cost, convenience and versatility. In general terms various chemical monochrome systems on glass and flexible film gave way to a small number of chemical color systems on flexible film. Though these both persist in niche consumer segments, and ‘Polaroid’ instant film was popular for a time for its convenience, CCD-based electronic systems now offer the greatest value to the majority of consumers because it marries quality, cost, convenience, and versatility. What is true is that the value delivered to consumers has constantly increased, either incrementally, or in leaps, each time supported by the right technological innovations at the right time.
To transform a product and disrupt a category we must learn from the past, and then be the creators of new S-curves on which to evolve. By using them to answer the questions “what is limiting the value of this product to this consumer?” and “what value attributes are not being exploited” we can open the door to transformative innovation capable of changing the character of the product and disrupting the market.

The punchline
Instead of a 90% effort spend on innovating within an S-curve, R&D should be spending at least 20% of its effort in defining the new consumer value S-curves. This means dogged deconstruction of the needs and consumer jobs being addressed in a category and the search for the new “how”—the new mechanisms to exploit in new ways. After this R&D returns to that which it is really good at already—describing and building “what” the product is and making it better.

Post script
Though only an illustration, consider the future of image capture systems. Today they are constrained to two dimensions. Perhaps the next S-curve will be 3-D image capturing to serve the 3-D printing disruption, enabled by color spatial laser scanning. Net net—print a 3-D color bobble-head selfie instead of a picture!

Stuart Wright, PhD

Director

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