Corporate Explorer

1Innovation Advantage

Conventional wisdom is that corporations should not even try to lead disruptive innovation. It holds that companies grown fat on the profits of a mature business model are incapable of doing something new and surprising. They are too covetous of their profits to risk pursuing unproven ideas, so, while they are willing to entertain good ideas, they rarely invest enough to see them prosper. That makes them ripe for what our colleague Clay Christensen has called disruption. Disruption is a phenomenon that turns all the rules of an industry upside down in a short time. Think Uber and the taxi industry. A stable industry for a century, Uber swept aside licensed taxi operators worldwide with its ride sharing service. Within a decade, the rules for an entire industry have been turned upside down. This phenomenon has only gathered pace as first the digital revolution and then the COVID pandemic fueled the fire of market change.

Christensen's famous book The Innovator's Dilemma (1997) concluded it was almost impossible for an established firm to lead disruption. His data showed that the winners were almost always insurgents, or startups, who succeed by attacking dominant market players. He argued that those that led in one generation of a product had no incentive to invent and commercialize a replacement. On the contrary, they had an incentive to defend existing franchises from being cannibalized. The rapid rise of the digital giants of the twenty-first century ...