Disruptive Development - Finding Balance Between Structure and Chaos

Kodak wasn’t exactly enthusiastic about the industry-changing breakthrough. At the time, Kodak was the dominant brand in the US photo industry, and Kodak didn’t want to cannibalize its film businesses. That is how they missed that ”kodak moment” and today Kodak is merely a shell of its former self.

Disruption is often described as a process where a smaller company with fewer resources can successfully challenge established incumbent businesses. Disruptive innovation begins by successfully targeting those overlooked segments, gaining ground by delivering a more suitable functionality, at increasing extent, and at a lower price. Disruption is a fact when mainstream customers start adopting the new offerings in volume. Sustainability is one of the main drivers for disruption today due to the need to deal with environmental and social issues.

An organization of today must be able to handle both structure and chaos - disruptive change as well as smaller day to day developments. One of the experts we interviewed said that – If anyone shall disrupt our business, it shall be ourselves! As consumers/citizens we will always be seeking the next thing. There will always be early adopters on the lookout for what’s new and interesting. If an organization can offer something new and exciting, cheaper, with better functionality, that is also a sustainable alternative, the rest of the industry will be left behind. We often tend to incorrectly predict advancement as being both faster than it is now, and slower than it will be soon. Technology growing exponentially is doubling its capacity at each increment, often following a classic S-curve. Initially, it remains very close to zero for a long time and we do not really notice the change. However, seemingly sudden, an industry is disrupted and might change the behavior of citizens, leaving old behaviors outdated. During maturity, the development flattens out.

The cases in this study differ - some include innovations that are more radical than others. We have cases where the project had to be changed dramatically and minimized, since new tech was not ready to be tried out in public spaces. We have other cases that have been able to try out radical innovations in a safer environment, such as a laboratory or testbed. However, regardless if the cases are more or less radical, it seems to be useful to manage innovative activities of different types and levels in the organization. Some of our respondents explain how they have corporate R&D teams that develop new ideas and products that the mother organization might shy away from, such as trying out ideas that might disrupt their own business. Whether being an innovation follower or leader, it is vital to keep an eye on future trends and technology to predict possible disruptions ahead.

Quotes from case interviews:

"Initially, you need to run these innovation projects in a very tight ship, it has to be strictly controlled in order to avoid huge delays.”
Mika Hakosalo, GrowSmarter Stockholm. (GrowSmarter - - Transforming cities for a smart, sustainable Europe)

"We aim at radical innovation – or exploratory innovation (sounds less daunting). Then one must also have the mission of finding entirely new ways of working.” Micco Grönholm, City of Helsingborg (H22 and the making of a smarter city)

"What we need is time and engaged stakeholders to perform an as big innovative project as the basic income experiment. We need politicians not only to plan but to listen to and trust the scientists and evaluate the effects for society. Beyond terms of office and political winds.”
Minna Ylikännö, Kela (Basic Income Experiment)

"As a highly innovative organisation, we need multiple ways to skin the innovational cat. Much of this innovation is just business as usual and occurs in our core engineering teams, including plenty of projects that other businesses would consider research. Then we have our business sponsored research streams such as robotics research, many applications of AI/ ML, simulation and so on. And then we have our 10X or advanced research department that are placing the bets that the business might shy away from placing or which the organisational antibodies in the mother ship might try to kill off. These are bets that I and my colleagues in the Office of the CTO (OCTO) get to place"
Paul Clarke, Ocado Group (Soma & SecondHands – Ocado)

"Pulling rabbits out of hat is a core competence, even when we first have to make the hat”
Paul Clarke, Ocado Group (Soma & SecondHands – Ocado)

"We are the radical invention team. As the most innovative group, we must sit independently and focus on testing and developing prototypes. We are fearless crazy boilers sitting here. It is important that we are independent of the line business in order to develop radical innovation."
Sverker Lindbo, Ocado Group (Soma & SecondHands – Ocado)

"We found opportunities to use Kiruna and the urban transformation as a platform to develop new systems that can be useful in other cities and in the business sector."
Mats Nilsson, Tekniska Verken Kiruna (Kiruna Sustainability Center)

Top learnings from interviews - How to find the balance between incremental and radical innovation:

• Create a fearless culture prone to change. Empower employees and team members to innovate their day-to-day work and to identify future possibilities for disruption, e.g. using old tech in a new way and/or using new tech in an existing solution.
• Technology should not be the center of innovation - apply a human-centric approach by involving the human perspective in all steps of the problem-solving process.
• Develop a financial strategy for dealing with radical changes in the industry. This strategy should have a scenario for both leading and for adapting to the exponential tech development.
• In some organizations there seem to be a tendency to shy away from disruptive ideas the closer you get to the core business. If so, it might be wise to keep your most innovative R&D team separated from headquarters.
• Resources: Invest in business intelligence and new tech research to keep an eye on future trends, tendencies and coming behavioral changes.
• Identify the type of innovation work (from structure to chaos) that is needed in different parts of the operation and different phases of the project. Have strategies for both adaptive and disruptive innovation.
• In disruptive innovation, legal aspects tend to be an obstacle. Partner (or at least start a dialogue) with legislative bodies and their most executive representative, early in the project.
• For advanced innovation it is vital to work with the hard-core experts - the innovative gurus. They are not normally the easy-going kind that like chit chatting over coffee. They are more likely to be questioning and high maintenance. Is your organization fit for that?

If you are interested in reading more about disruption, we recommend the
following cases: SoMa & SecondHands - Ocado, Drive Me, Hyperloop one, H22-The making of a smarter city, Innovation Park, Digitalizing the farming industry, 3D-printed houses, Future homebuyers in the blockchain, Bio-packaging - MakeGrowLab, DOVU - using blockchain for smart mobility.