INNOBLOG

While the global economy began slowing down in late 2007, forces transforming the face of business trace back more than a decade. Over that time period, technological improvements have made it ever easier to start and scale a business. Convergence went from being a cliché to a reality. Companies from countries like China, India, and Brazil burst onto the world stage. The global slowdown coupled with the credit crunch in late 2008 accelerated these forces.

If sagging employment and dwindling economic prospects led historians to term the 1930s the Great Depression, perhaps it is appropriate to tab today's hyper-competitive market where competitive advantage dissipates in a heartbeat the "Great Disruption."

In 2009, managers will realize that they are no longer dealing with a crisis; they are dealing with a condition. In the Great Disruption, companies simply can't anticipate that today's competitive advantage to last for more than a few years. Former Intel Chairman Andy Grove anticipated this more than a decade ago when he wrote, "Only the paranoid survive."

While companies might want to return to the corporate equivalent of comfort food--cost-cutting and a focus on the core business--the Great Disruption won't allow it.

Some companies have been developing their innovation abilities for years. They are in good position to seize the opportunities that always present themselves in tough economic climates. ...

Read the rest at Scott's Harvard Management blog, Innovation Insights.

Online microblogging and social networking service Twitter started in March 2006 but didn’t really hit its stride until the past few months ago. September 2008’s 5.57 million visitors represented a fivefold increase within a month’s time. This usage curve has dovetailed with my own Twitter experience. I signed up for Twitter as @ReneeCallahan in the spring of 2007, when a number of my blogging friends were signing up. I couldn’t figure out what to do with it until this past October, when I joined a group of people “tweeting” snippets from the Business Innovation Factory’s BIF-4 conference.

Since then I’ve stepped into the Twitter conversation stream several times each day and have come to value the camaraderie and knowledge-sharing I find there. It's truly amazing how much information can be put into a 140-character post.

I’ve begun to wonder whether Twitter has in it the seeds of disruption. First thing I'd need to know is, if Twitter is in fact disruptive, what is it disrupting? Social media consultant Laura Fitton of Pistachio Consulting (@Pistachio) helped me gather information on this by putting up a quick survey using Google Docs and publicizing it to her 12,500 twitter followers. Here's what 128 respondents felt Twitter disrupted when they were allowed to choose all applicable answers:

When the respondents were forced to choose only one answer from the list, the results looked like this:

Open-end answers to the question included: Craigslist, real conversation, sleep, PR, media gatekeepers, eating, and writing my dissertation. There was also a fair amount of comment in the open-end answers as to whether Twitter is truly disruptive.

In order for Twitter to disrupt, it would need to display the characteristics of disruptive innovation: it would need to be a good-enough, low-cost solution to a job that anough people were trying to get done that it would create a new market at the low end of an established market.

What do you think? Is Twitter potentially disruptive? If so, what might it be disrupting?

A recent New York Times article mentioned how the media still hasn't found a compelling way to describe today's economic climate. Everyone agrees that something important is going on, but no one has found a simple, memorable phrase that captures that importance.

A Thursday Times blog calling for nominations has generated more than 150 comments. My suggestion: the Great Disruption.

Why the Great Disruption? In the Great Depression, demand, output and wages declined across the board. Today's times are different. It isn't just that demand is sagging. It's that change is ripping through markets at unprecedented pace. Competitive advantage that took decades to build disappears seemingly overnight.

The Great Disruption didn't start in 2008. Over the past decade, technological improvements have made starting and scaling businesses easier than ever. The rise of China, India, Brazil, and Russia mean market leaders have to deal with more sharp-elbowed competitors than ever before. And industries are frantically converging and colliding.

Certainly the pace of change has accelerated over the past few months, but leaders in media, retail, defense, health care, automotive, and high-tech can attest that they have been grappling with the Great Disruption for some time.

The Great Disruption creates real challenges for managers who have made a career out of focused execution.

Read the rest on Scott's Harvard Management blog, Innovation Insights.

The following is a guest post by Juan Pablo Vázquez Sampere.

To be a CEO these days is an especially difficult task. The economic crisis can unexpectedly shorten your legacy and your tenure. Your competitive advantage might be eroding and you are constantly worried your top talented individuals might feel disappointed or want to leave. While CEOs are asking everyone and anyone where they see the next wave of growth, they pray their competitors won’t detect it first.

The disruptive innovation model can help CEOs find the next wave of growth. Our research, using disruptive innovation, has isolated the impact the crisis will have on almost any industry. This research has been distilled from the last six months of data we have from our clients in Europe that, overall, operate in 16 industries.

Here’s what the current landscape looks like when viewed through the lenses of disruptive innovation:

1. Upsurge in overserved consumer demand: More and more consumers are migrating to products that deliver less for less. Their willingness to pay for almost any product has decreased. They have finally realized they are just as well satisfied with a good-enough solution that is more simple, convenient and affordable. In a way this is a massive upsurge in demand that has been left unattended. It is also a demand that is not going to return to where it was before the crisis emerged. We have found that the best recipe to tackle this opportunity (before your competition does) is picking from your portfolio a cadre of your worst-performing products and making them more simple and foolproof. They must be carefully adapted to a very specific moment of consumption and the features your corporation values the most must be dramatically reduced. How do you know you are doing this assignment well? If you and your organization think the product is getting unacceptably worse… then you are on the right track!
2. The fastest learning moment: This coming year 2009 will be one of the best years ever for entrepreneurs and new business ventures. The reason is that the crisis has shortened substantially the time you need to realize you made a mistake. If you launch initiatives based on “invest a little, learn a lot” this is the year when you will learn “the lot” very quickly. This is because when the economy is thriving consumption is incentivized and that generates an inverse-selection problem, that is, consumers you are not interested in are buying your product without realizing its full value. Unfortunately since they appear in the market research studies, they subsequently drive investment bias in the next sustaining innovation. This biased input makes the product less attractive to consumers who do find its true value. Paradoxically, the payoff for experimenting in a crisis scenario is tremendously high.
3. Main competitors will be frozen: Corporations focused on chasing the next high-margin consumer have frozen their initiatives because of uncertainty. The reason is that getting approval from the board is now very difficult. These days you might only get it if you are proposing a cost-reduction initiative. In my opinion this is a gift from your competitors. They are going to be paralyzed for the next couple of years! Next year their projects aren’t going to pass through the board scrutiny. The year after they will have to update their pitch and put the resources and team together, as you know, a very time consuming process. When was the last time you knew what your main competitors were going to do for the next couple of years?

Here is a winning formula for those planning to launch a new product or to start a venture in these crisis-imposed circumstances: Pick an industry that is very fragmented, that has three or more weak economic substitutes (same need served with different technologies), that has more than 80 percent of its demand overserved, and has demand that is underserved and has remained so for at least five years.

This should be the central point of your conversations. There are quite a few industries that meet these attributes. If you don’t start this initiative somebody else will. If so, solid research shows that will be the last mistake your company will make.

Juan Pablo Vázquez Sampere is a Partner at Stratemic and an Associate Professor at IE Business School in Madrid, Spain. 

Imagine that you’re a television executive and are deciding whether or not to renew a show. The show in question has generated a lot of buzz and it seems like everyone in the demographic it targets is talking about it. Why then do the ratings look so bad?

Maybe because the definition of success is the same, but the way people watch television has drastically changed.

We often tell our clients that game-changing plays must be accompanied by similar innovations in the metrics that evaluate success or failure. It should be no surprise then that in an age where we can DVR our television shows and watch them later, stream them over the Internet in a coffee shop, or view them on iPods, the Nielsen rating is starting to show its age.

The show bringing this issue to the media forefront?   Gossip Girl.

Whatever your opinion of the CW’s teen-drama Gossip Girl, there’s no avoiding the fact that this show is a pop-culture success as the show has propelled its actors and actresses into the limelight. How is it then that the show has such poor Nielsen ratings? The answer: 'alternate" television viewing, including millions of downloads on iTunes.

A big risk to evaluating programs, on television or otherwise, is to evaluate them with the wrong metrics and cancel them as a result. Fortunately (for fans of the show), the CW isn’t wedded to Nielsen ratings. As networks like the CW catch on that traditional ratings don’t tell the whole story, there is the potential to both change the way these shows are judged and to find a better way to capitalize on these alternate forms of television consumption.

In the words of one Gossip Girl character, “Who watches TV on a TV anymore anyway?”