Disruptive Innovations Call for Disruptive Marketing

Developing and taking innovations to market should be simple. Conventional wisdom might suggest the solution is to be found in marketing. After all, marketing looks after markets. However, companies experiencing rapid transformation (e.g., technology and new media) find that if marketing is focused on fighting incremental battles in existing markets, disruptive opportunities in new markets are lost.

Disruptive innovations are associated with disruptive markets. Disruptions significantly alter existing markets. Initially, as the new market is yet to be created, potential customers are difficult to identify. Even in cases where customer profiles can be identified, the input received needs to be analysed cautiously, as lack of familiarity with the innovation might limit the usefulness.

Critical to grasping the issue of successful marketing in the context of disruptive innovation is understanding and adopting a new approach to marketing management. Orthodox marketing dictates a linear process of 1) seeing the opportunity for innovation, 2) acting so as to develop the innovation, and 3) taking the new innovation or innovative product to market. In other words, conventional wisdom points towards addressing the “see” problem with a very systematic approach to identifying disruptive opportunities vis-ŕ-vis business intelligence capabilities. The “act” phase is dealt with by allocating funding specifically for development of innovations, thereby providing adequate funding, while avoiding issues related to the cannibalisation of budget allocated to the company’s core business. The “launch” of the new product is managed by a strategic initiative directed at building the market a niche at a time. Traditional approaches emphasizing techniques focused on exploring the past in order to interpret the current business environment and extrapolate into the future are not likely to work in the face of radical market disruption.

The fact that disruptive innovations give rise to markets that previously did not exist means that marketing must engage in market creation. Focusing on the “see” and “act” phases is paramount. Market creation is an iterative process that requires a combination of vision, or “seeing,” and market involvement, or “acting”. Companies that “see” tend to do and companies that do tend to “see.”

In market creation, the distinction between “seeing” and “acting” is blurred. In fact, they are essentially two sides of the same coin. The implication is that in an emerging market, where the learning process evolves, managers cannot follow a piecemeal approach to marketing. They cannot wait until they have all the relevant information before moving forward. Action must be taken long before the “see” phase is complete. In addition, only early involvement in the emerging market can yield useful insights. In short, “seeing” and “acting” reinforce each other.

Consideration of marketing and disruptive innovation as an iterative process of market creation involving dynamic interaction between “see” and “act” leads to six imperatives:

• Manage “see“ as a process, not a one-time event. “See“ must be managed as a continuous learning process, spotting the disruption as soon as possible and following it in order to understand the environment and adapt in real time.
• Act to see, do not be passive. In disruptive markets, if you want to “see,“ you have to “act“ and be engaged.
• Foster vision plurality. Nurture internal diversity and manage alternatives, even conflicting views about the company’s environment.
• Institutionalize the vision. The “see“ process is not complete until it has been institutionalized. The vision must be shared by the company as a whole, or at least by a significant part of it, not just by a few managers.
• Stage commitment with iterated actions. Rather than being the centerpiece of the action, the product launch becomes just one additional step at the end of many active steps.
• Reach out to new networks. Get involved actively and early in the emerging market, even when the direction of things is not yet clear.

Understanding the “see-act” interaction as a dynamic and iterative process has implications for a transformation of the marketing function. Applying orthodox marketing procedures in the face of disruption will only lead to classical failures. The challenge is to move away from description to develop market insights in the context of incomplete, yet evolving, market understanding. Only when marketing can grasp disruptive innovation as a creative process involving iterative trial and error will it be able to claim a chair at the table based on creating and winning new markets.

By Phillip A. Cartwright

This article is adapted from Phillip Cartwright and Philippe Silberzahn. “Acting to See: When Disruptive Times Call for Disruptive Marketing.” European Economic Forum. Forthcoming, June 2007.