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Running head: DISRUPTIVE INNOVATION 1

Disruptive Innovation

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DISRUPTIVE INNOVATION 2

Disruptive Innovation

Summary

Disruptive innovation is an influential prospect in business, thus rarely questioned and

widely accepted across the world. A majority of the big and well-established companies

appreciate innovation since it grows their businesses. The developed firms have to master

ideation, incubation, and scaling; to succeed during the disruptive changes. Ideation means

creating new ideas for the company. Incubation entails testing those plans in market sectors

while scaling involves the reallocation of the abilities and assets that are needed to expand the

business.

Ideation

In most situations; companies prefer sustaining profit performance and revenue, hence

consider improving the ongoing business compared to starting a new one. Industries use various

techniques to generate ideas; which includes open innovation, Corporate Venture Capital (CVC),

design thinking, and employee involvement (Binns and O'Reilly, 2019). In open innovation, the

company looks for ideas externally by, for example, inviting clients to share their thoughts for

new services and products. Large companies invest in small and potential firms in corporate

venture capital. Design thinking involves creating possible solutions or prototypes to customer's

real problems. There can also be involvement of employees since they share their ideas through

platforms such as internal contests and online suggestion approaches.

Incubation

Incubation stage enables the management to filter out the bad ideas from the good ones.

Three methods that can be used to separate the two; that is a lean startup, the model canvas, and

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the launch pad. The lean startup phase involves operating reverse from the results to get rid of

unnecessary or wasteful practices(Binns et al., 2019, pg.55). The model canvas splits the new

business idea into various segments like revenues streams, cost structure, value proposition, key

resources, key activities, and key partners. The launch pad is a design school for entrepreneurs

meant to guide them on the ways of building a product or services.

Scaling

Scaling a business model or a new business, which shifts from an experiment to a running

business, is both an organizational and commercial vulnerability. A new business has to attract

customers quickly to maximize opportunities in the market. Large established companies,

however, have more access to them hence scale faster, unlike new firms (Binns et al., 2019, pg.

58). Industries which are good at scaling consider various options to fulfill a new venture's

needs; for example, through mergers and acquisition, and or leveraging.

Article Review

Positive outcome

Employee involvement during the ideation stage is indeed essential, as mentioned in the

article. Firms should also appreciate employees’ ideas when it comes to solving any arising

issues since they would feel that they are useful resources in all aspects of the business

operations. Front-line employees are also reliable sources of ideas because they interact directly

with destructive technology and the market to determine environmentally friendly and effective

equipment for various purposes such as the need to use self-driving vehicles. The senior staff

have to know public needs the same way as the front line workers (Braithwaite, 2017).When

employees is involved only when companies want to create process or products which fit within

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their current business models, then they would feel left out when it comes to handling issues. It is

also advisable to create a special team which would gather ideas from the workers and applies

them. Future pieces of research can compare the special teams and front-line employees’ roles to

determine if they are complimentary or contradictory, and if their importance are based on

distinctive conditions like business nature and project stage.

Managers should react in a specific manner when responding to potential competitors,

given the proof that disruptive innovation has less predictive power. The leaders should first

compute the winning value before finding means of leveraging existing abilities and working

jointly with other firms (King and Baatartogtokh , 2015, pg. 87). The authors have managed to

talk about those aspects, making the work more reliable.

Negative Outcome

Organizational culture indeed limits the ability to promote the innovation process,

especially when an already established company intends to acquire a small and new one. When

startups and incumbents intend to collaborate, they should balance factors separately.

Furthermore; apart from acquisitions, joint ventures, and even stake ventures, there could be

analysis on other forms like licensing of intellectual property and their challenges. Some cultural

elements like risk-taking and entrepreneurship are conserved, although they may not contribute

to success in all situations. Many people tend to believe that entrepreneurship and taking risks

are guaranteed ways of performing well but it is not the case, since risks could lead to failure or

success. A business should, therefore, keep in mind that taking risks can still lead to failure and

does not necessarily mean high chances of a favorable outcome. There have been observations

with regards to big firms performing unlike small ones when it comes to disruptive innovations

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(Binns et al., 2019, pg. 58). Nonetheless, there lack empirical tests to validate that argument, thus

the need to consider future studies. Another thought is improving managerial education programs

so that small enterprises have the knowledge and skills of handling disruptive innovation.

Studies on contexts in various countries are useful to learn ways of making a disruptive

innovation prosperous while considering entrepreneurship culture and regulations. The article

has elaborated only on American based companies, that is IBM and Amazon. The work would

have been more beneficial and applicable to students and researchers living in other countries, if

the writers also discussed industries based in other nations.

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References

Binns, J.M., & O'Reilly C. (2019). The Three Stages of Disruptive Innovation: Idea Generation,

Incubation, and Scaling. California Management Review.

Braithwaite, V. (2017). Tax and Democracy: Bygone ideas or time for reinvention (Vol. 598, No.

1, pp. 12-32).

King, A. A., & Baatartogtokh, B. (2015). How useful is the theory of disruptive innovation? MIT

Sloan Management Review, 57(1), 77.

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