CHAPTER 6: CONCLUSION
6.9 D ISRUPTIVE I NNOVATION P RAXIS M ODEL
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Figure 6.2: The Disruptive Innovation Praxis Model The Disruptive Innovation Praxis Model proposes that:5
As part of its company reformation strategy, when the disruptive innovation condition presents lower-cost features than those of the incumbent, the business could respond through innovation of its business model by integrating business components.
Reduction in the costs of the existing features could mean that all the internal management practices can be combined into one system and not exist as separate components. In this way systems can become an integral part of the company's management system through seamless integration of business processes.
As part of its company reformation strategy, when the disruptive innovation condition presents more convenient features than those of the incumbent, the business could respond by innovating its model by streamlining business processes.
5 This is the elaboration of Figure 2.17 in Chapter 2.
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More appropriate and useful features create opportunities to reduce complex and irrelevant business processes that may involve multiple hand-offs and re-entering of data. By streamlining these business processes, cycle time could be improved and human error reduced.
As part of its company restructuring strategy, when the disruptive innovation condition presents more improved functionality than the incumbent one, the business could respond by innovating its model by adopting client interaction to benefit from improvements.
Improved functionality could result in not only enhanced workflows with employees but also with customers. This could result in additional innovative products and services, effective marketing, increased access to clients and ultimately a lower cost of doing business.
As part of its company restructuring strategy, when the disruptive innovation condition presents more improved simplicity of use in its function than that of the incumbent, the business could respond by innovating its model by adopting collaborative practices to extend its value proposition.
Improved simplicity of use in the technologies could lead to collaboration within the network of the business with the aim of creating new and unique value propositions based on a unified approach to value creation. This could take place via collaborative networks such as supply chains, extended or virtual businesses and clusters, all of which strive to increase customer satisfaction and business value.
As part of its industry reformation strategy, when the disruptive innovation condition presents an apparently inferior product/service than does the incumbent, the business could seize the opportunity and respond by innovating its model to adapt industry fundamentals to promote product value creation.
In many instances disruptive innovations will not at the outset meet customer expectations when compared with incumbent technologies, as they could then lack certain features or capabilities. Given that they are often less expensive, they would
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appeal to new or less-demanding customers. In so doing, a business can take the opportunity to seize market share from established competitors while creating value to the product.
As part of its industry reformation strategy, when the disruptive innovation condition presents the potential to capture clients at the bottom end of the market, the business could seize the opportunity and respond by innovating its model to adapt marketing initiatives to target clients at the low end of an established market.
In instances where the disruptive innovations are inferior in performance to begin with but are cheaper, they become attractive to customers in the lower segments of the market. A disruptive innovation could often take longer to develop and the risk associated with it is higher than with the entrenched innovation, but once it is deployed in the market, it often achieves a prompt penetration and higher degree of impact on the established markets. This creates an opportunity for a business to seize the market share at the low end of the market while improving its product value and gaining more market share, and in so doing, disrupt the industry.
As part of its industry restructuring strategy, when the disruptive innovation condition presents the potential to establish an entirely new market, the business could seize the opportunity and respond by innovating its model to innovate its product or service by increasing value proposition to target non-consumers.
As and when a disruptive innovation presents itself with an opportunity to deliver on a promise of new and added value to customers, the business has the potential to create a new market and value network by introducing new customers to the industry.
This is because market leaders tend to avoid the disruption at first, since it is generally not profitable enough and because the new development can shift resources away from entrenched and sustaining innovations.
As part of its industry restructuring strategy, when the disruptive innovation condition presents the potential to establish an entirely new industry technology platform, the business could seize the opportunity and respond by innovating its model to innovate and transform the industry value chain.
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The unpredictable and dynamic nature of disruptive innovation means that it could change the dynamics of value delivery in a production or service industry. A change in industry technologies can enable businesses to simplify whole stages of the value chain, resulting in significant reduction of capital and infrastructure costs. In so doing a business could restructure the value chain to offer substantial benefits to the customer by removing or shifting stages in traditionally long and complex value chains.
There is a risk that this Disruptive Innovation Praxis Model could be overly linear and simplistic in its presentation. It does consider that in reality, stages of the business strategy may overlap or never happen. The model acknowledges the myriad of factors that could affect the strategic process as well as each of its components, and the intricacy this involves.
It is not the intention of the Disruptive Innovation Praxis Model to be prescriptive by serving as an evaluation ladder for development agents deciding to grant support to SMEs. Instead it has an interpretive, organisational character in that SMEs can be supported in their understanding and evaluation of the business model innovation required to respond to an opportunity which arises from the state of the disruptive innovation. Development agents can in this way also be directed in promoting the appropriate support to the SMEs.