Sponsoring and Disrupting: How to Achieve Breakthrough Innovation


Sponsoring and Disrupting: How to Achieve Breakthrough Innovation

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Innovating is hard, but forming a dream-team doesn’t have to be.

Through disruptive innovation, new technologies emerge that penetrate the market from below and rapidly overtake established businesses. Online innovation challenges help companies develop disruptive innovation, or sponsor startups that do so.

Let’s take a look at the why and the how:

The Ugly Truth About Established Models

Yes, incremental innovation is fundamental for growth and improvement.

But if you put all your eggs in one basket, you risk encountering the innovator’s dilemma. A term coined by Clayton Christensen to explain “how successful, outstanding companies can do everything “right” and yet still lose their market leadership – or even fail –  as new, unexpected competitors rise and take over the market.”

If you focus solely on perfecting existing models, competitors can sneak in and hijack your territory. The two main reasons for this:You’ve done the grinding to establish what works and they simply adopt your findings.

  • You’re so fixated on polishing up, that new trends and technologies fly right past you.
  • Cutting edge innovation with the right sponsorship renders a running start to market disruption.

This is why the best innovation methods involve becoming a sponsor or disruptor.  It’s how you strengthen your hold, expand your market share, and secure your place in the future.

Understanding Disruptive Innovation

As the name already advocates, the goal is to disrupt an existing market and its value chain. Do it right and you’ll eventually displace front-line firms, products, and alliances.

The market’s already established, so you enjoy the second mover advantageBuilding blocks for a new approach are there for the takes.

By analyzing the current situation you can use the information to redesign conventional business models. Divergence in the technology used, price, channels etc. can be enough to obtain market segments that are currently underserved.

Redesign the conventional: “The same, but better.”

Disruptive innovation provides an alternative solution to needs that are being solved by something else. Therefore, initial integration of your product into the market will be easy.

Cell phones were quickly integrated because we were used to using landlinesThe laptop was just a portable version of the PCMotorbikes offered a more agile way of getting around than cars.

Impactful game-changers can be produced by simply rethinking existing designs.

Amazon’s early disruption of the book market is one of many examples. Bezos foresaw the potential of online sales and changed the distribution channel of a common business model. A quarter-century later they’ve evolved from a garage-based business to sitting comfortably on the throne of an e-commerce empire.

Target Underserved Markets to Exit Competition

Customer’s needs were already being fulfilled by the many bookstores that existed. Amazon achieved success because of their innovative approach and non-existent competition.

Disruptive innovation targets market segments that are underserved in performance or price. Segments that other companies either aren’t attracted to or don’t have the technology to compete for.

Apple’s first personal computer underperformed against the traditional PC. The Macintosh offered a new value proposition of intuitive design and usability. They appealed to consumers that had no use for the complexity offered by the incumbent.

Fast forward to the present and Apple is the largest information technology company by revenue.

The Best of Both Worlds with Collaborative Innovation

Sure the examples listed so far have been about companies in their infant years. But just because you have an established business model that works, doesn’t mean there isn’t room for expansion.

You have to find trends before they become.

Foster Internal Innovation

Animating employees to develop new products and services is a great way to accelerate innovation within a company. Open Innovation challenges and Internal hackathons are a goldmine for finding valuable solutions that disrupt an existing market.

Employees often have high-voltage ideas but are too afraid to act on them. Hackathons provide them with the necessary training to develop an idea into something marketable. As an added bonus they also boost your company’s overall digital transformation.

But is it Worth the Risk?

At the same time choosing this method of innovation means you risk disrupting products and services that bring you profit.

Kodak is a prime example of this fear leading to a company’s demise. Steven Sasson, an engineer at Kodak and father of the digital camera, summarized the company’s initial reaction to his invention as:

“that’s cute—but don’t tell anyone about it.” 

Instead of developing it, they sat on the idea to avoid a decrease in film sales, only to be overhauled by their competitors later on down the line.

Recognizing disruptive technologies is just as significant as conceiving them. Especially since successful disruptive innovation is no easy nail head to hit. You could just end up investing valuable time and financial resources with nothing profitable to show.

Understandably enough, it’s hard to stray from an existing system and come up with an entirely different approach. Models used are so deeply embedded into the mindsets of everyone in a company, that producing something innovative can be quite the challenge.

This is why many successful companies turn to sponsoring startups.

Sponsoring Startups for Dream-Team Innovation

You can boost your company’s innovation and digital transformation without having to start from scratch.

By sponsoring innovation challenges, you target breakthrough innovation and future technologies. Engaging with startups of the future means seizing the opportunity to incorporate potential goldmines in your business model. 

It’s the perfect way to identify trends and form strategic partnerships before they transform your market.

Startups will do the disruptive work for you. In return, you provide them with valuable intellectual and financial resources. Plus, you benefit from an outsider perspective on your own technologies.

Form a Dream-Team, but avoid a Nightmare-Partnership.

Difficulties emerge when there’s a clash between managerial systems and an organizational change. There’s always a risk of failure if collaborating with an unsuitable startup. And like with any bad investment, this can backfire.

Sponsoring innovation competitions can help you find the right startup to cooperate with and by mentoring them you start building a professional relationship from the get-go. They allow you to simultaneously assess potential and compatibility.

By choosing the right intermediaries you avoid running into many of the risks involved.

Article by Mila Grote – Edited by Jean Bonnenfant

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