Growth through Disruptive Innovation

Takeaways on a speech by C. K. Prahalad speaker at the World Innovation Forum.

So we are beginning to see the impact of current economic crisis. The bad news is there is going to be significantly more regulation in the future but the good news is there is a tremendous access to global talent like we have never seen before. New competitors who we did not think could play on the global stage from India, China Brazil etc are coming online. In fact for the first time 4 billion people will be connected – that’s going to have an impact. 4 billion people who want to be part of the market!

So the question quickly becomes: How do you build disruptive business models?

Take a company like Build a Bear workshop which is the inverse of the typical toy maker. Typical Toy makers are usually: large volume – low cost – low margin – seasonal – instable market – mostly a fad. Build a Bear workshop’s model is: moderate volume – low cost – high margin – all year round – stable market – not a fad. And all the experiences are very personal and very contextual!

But you say “C.K. my company is in a more traditional business selling a commodity to other businesses.” So how about we try this disruptive innovation on the tire business. If I can show you how to disrupt the tire business then you can’t tell me your business is unique. Would you agree?

Here is how to disrupt the Tire business

Instead of buying tires, how about buying tires by the usage? You pay a rate calculated by sensors in tires so that you can pay by the mile! For fleet owners they could pay one blended rate based on all the makes and models of tires they have. You can also track with GPS how the tires are being used and give feedback to drivers on how to drive better which in turn can drive down your insurance costs. And then manufacturers like Bridgestone will have real time info on how people actually use their tires. All of this fundamentally changes the economics of this industry.

You need to think about how to create a single experience per user. This is the path to radical innovation.

The key drivers of the value will include:

Personalized experiences – think individualized experiences
Co-creation process – think the user has a say in the outcome
Delivery networks – different modes of delivery
Communities – for further innovation
Individuals – individuals rather than mass

To go from products to solutions to experiences the transformation requires:
Imagination, passion, courage, humanity, humility, intellect, and a little bit of luck!

3 comments to Growth through Disruptive Innovation

  • Louis Porter Jr.

    Straight Genius is how I would describe this.

  • Josh

    Kudos on the originality of the tires idea. However, I don’t know how practical it really is – people are going to be very adverse to driving around with sensors in their car knowing exactly how and where they are driving. Can you say ‘Big Brother’? Adoption rate will not be very high, and without enough data, how useful will this information be to Bridgestone?

  • Paul Dunay

    @ Josh

    You make a great point on the big brotha angle

    but keep in mind only a few years ago we were all concerned about Credit card theft on line – and now we are all twittering and facebooking etc ..

    the direction of that trend is more open not less – and unless there is something huge incident I dont see that changing

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