Disruptive Innovation

Mar 07, 2020
Disruptive Innovation.
 
In a FB post conversation about the Dunning-Kruger Effect, I made mention of this business theory, Disruptive Innovation. This is a fantastic concept. It essentially explains why if a business does not innovate, it will go down.  It walks hand in glove with the Dunning-Krugger Effect. Well, many of these business theories go hand in glove as they do work together. The discussion also mentioned this guy that is credited with inventing the concept and term of Disruptive Innovation.
 
One of the interesting concepts of how this theory plays out is in this whole essential oil business. The secret of the main big MLM that successfully made the application of this theory is Young Living. Then a number of years later, actually about the right number of years along comes the upstart, DoTerra. They then successfully applied this theory. But since then, no one has pulled it off. Likely the best explanation is that all of these break-offs from these 2 cores have just tried to repeat the same models used in these 2 operation's models. This is never really successful and as we have observed, the observational assessment is correct.
 
So in order for this business to break out of this destructive failure pattern, a complete revolution has to take place. Here is a good example of where I am going. From an article on this idea of disruptive innovation is the big box stores, such as Sears. KMart (I put this store in here on purpose, as Sears eventually took them over with both of them basically failing), as well as many other stores, along with the whole gamut of the economic targeted groups. There are 2 core threads that are always in there, regardless of the many other threads. Those 2 are customer sensitivity and pricing. Pricing always follows the customer sensitivity part. The successful companies that innovate will always keep the customer sensitivity at front and center. It is amazing what storms and assaults that a company can weather if the customer sensitivity is never abandoned. Then they make sure the price keeps in line with the customer base and the level of the innovation curve.  This is best explained in the subgrouping of the disruptive innovation of Low-End Innovation.
 
Most of the time when a company fails is when a company that is destined to die, cuts corners on the customer sensitivity side.  What happens when this theory comes into play, their thinking is that if they innovate on the price, that it will make up on the destructiveness of the lack of concern of the customer sensitivity aspect. When this aspect has gained footing, it is easy to observe, by the way, it is a matter of when not if the company goes belly up. By now you should have observed that I have a strong bias in support of customer sensitivity. I realize that it makes me an easy target for many of the business psychopaths out there, but the bottom line is that I am right and there is no getting around this aspect. So since you can't get around the concept, all I have to do is adopt the idea and I will be safe in being arrogant.  Don't you love that idea?
 
Right now we are going into a particular economic cycle that we see a number of these different theories wanting or well at least begging to be played out. Part of these ideas of wanting to be played out is that as the economy gest better, at least from all appearances, we see prices increasing faster than wages. Now I know the official inflation rate is way low, but this is a figure that is openly manipulated. Many economic concerns are interested in this number to be less than reflecting reality. When this cycle hits a point of changing trajectory, then the system begs for some disruptive innovation to take place. Normally, in this cycle we see the customer sensitivity go by the wayside as the first to be thrown overboard.  Many poorly managed businesses will fail in this cycle. In my opinion, they have become inflated their self-importance and become lazy, leading to customer sensitivity not being a concern and thus the business volume dries up as a result. At least that is the politically correct perspective on the subject. The reality of it is that another company simply was better at recognizing the need for disruptive innovation and successfully applied the concept.
 
In the past, during the '70s, we observed this same curve raising its ugly head. I say ugly because it was not pretty for some of us. I am knocking on the 61 years old door.  I seriously doubt that anyone younger than me was cognitively aware of what was going on, so those that are younger than me are going to be blindsided by the current movement. Of course, those that are older, know what they looked like and what it feels like. Just ask them, they might be able to educate you. The people on the coasts, where this stuff usually starts, have already been experiencing it or are in the middle of having their head getting squeezed in a vise, figuratively speaking.  Those of us in the flyover zone, well, put it this way, most haven't a clue. A few do, of which I am one, are freaking out. However, all is not lost. What needs to be done to protect oneself and your business is to play your cards close, make sure every business move is self-supporting and above all, double down on customer sensitivity. Those that do, will thrive in the upcoming climate. IE; they are the ones to recognize the need to apply disruptive innovation, successfully to their operations. Please keep in mind that it doesn't matter the size and scope of your business operation. The same ideas apply and are the very same, only differing in size and scope. The same idea also applies to you as an individual. The same concepts apply to the individual person as they do to the business structure. I kind of like to think of a business is an individual that must be served and managed. Poor serving and care of the business individual results in a psychotic wild card. Proper care results in a business that will serve you well. I wish you well as we move forward.
 
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