6.12 How to Design Disruption

Marcos Antonio de Lima Filho, PhD.

This section concludes the discussion developed in this chapter by proposing a new definition for disruptive innovations and, by extension, a novel explanation for this phenomenon. This type of innovation can be characterised as the disruption of a dominant design, design concept, product architecture, or design hierarchy. The following operational definition of disruption has been instrumental in the data analysis conducted during this study:

Disruptive innovation is characterised by the introduction of a new qualitative trait (like a new material, component, feature, or form factor) into an existing architecture (like a product, system, or service), or the conception of a new architecture.

Disruptive innovation, as per this definition, involves the introduction of a new qualitative trait into an existing product architecture. These qualitative traits could include a new material, a novel component, a unique feature, or a distinctive form factor. This is akin to adding a new categorical variable in a dataset. For example, if we were considering a dataset on commercial aircraft, the introduction of a new fuel like “hydrogen” would add a new category to the “fuel type” variable.

In comparison, incremental innovations are more closely linked to numeric variables. This is because incremental innovation typically involves gradual improvements to existing traits, which can be measured quantitatively. For example, improvements in battery life, screen resolution, or processing power of a smartphone are incremental enhancements that can be measured and analysed as numeric variables.

Hence, this operational definition can contribute to future studies in the field of innovation management and technological evolution. By categorising disruptive innovations as those that introduce new categories and incremental innovations as those that bring numeric improvements, this definition offers a more precise and objective framework for assessing technological advancements.

While there exist numerous interpretations of disruption, my preference lies in defining disruption as the introduction of new qualities, whereas incremental innovation is characterised by the introduction of new quantities.

At first glance, this definition may seem too broad and at odds with the current disruption theory. However, it should be considered that this conceptualisation aligns with both contemporary linguistic usage and the original etymology of the term. Indeed, the English word “disruption” derives from the Latin verb disrumpo, which means “to cause to burst, break apart, split, disrupt”. In evolutionary theory, the concept of disruptive selection encompasses all of these meanings. Also referred to as diversifying selection, disruption represents a process that happens when a population is divided into two distinct groups. As reviewed in Section 2.4, disruption is intrinsically tied to diversification, serving to disrupt (break apart) an established order.

By employing the grounded theory method and its constant comparison technique, I was able to understand the evolutionary nature of disruption. To understand this analogy, imagine a market as a population of distinct products and services. When a novel feature or component (i.e., a new quality) is introduced into a product, it can be equated to the introduction of a new trait within a population in nature. By analogy, disruptive innovation creates a division within the market: the product population is divided into those that incorporate the new feature and those that do not. The new feature “disrupts” the existing product-market equilibrium, just as a new trait “disrupts” the established genetic equilibrium within a population. Thus, in both contexts, the term “disruption” reflects a process that breaks apart an established order, leading to diversification and evolution.

Apart from its roots in Darwinian evolutionary theory, the concept I present here is also in harmony with Schumpeter’s concept of creative destruction and his insights into entrepreneurship. Schumpeter (1942/2010) considered innovation as both the creator and destroyer of corporations and industries as a whole. He was among the earliest scholars to note the disruptive nature of technological change, observing that it could lead to waves of “creative destruction” (Utterback & Acee, 2005). In his view, the essence of entrepreneurship is the ability to break away from routine, to destroy existing structures, to move the system away from equilibrium; for Schumpeter, the entrepreneur is the disruptive, disequilibrating force that dislodges the market from the somnolence of equilibrium (Kirzner, 1973, p. 127).

As observed in this research, major disruptive innovations have triggered significant disequilibrium amongst established players. Disruptive innovations present new possibilities, or new “combinations”, as Schumpeter would say. Disruptions frequently introduce new technological foundations or architectures, exhibiting considerable divergencies: gasoline versus electricity is a prime example. Such disruptions are also associated with the emergence of new components and product categories. These components serve as the building blocks (i.e., genes) for new products (i.e., new species), thereby leading to the creation of new market spaces. Electric vehicles, for example, have introduced 41 new components while eliminating 165 others from the traditional internal combustion engine architecture (Figure 6.12.1). This evidence demonstrates how a disruptive innovation is set to break apart the existing industrial equilibrium:

Some established suppliers in the sector will be dramatically impacted as demand for some parts will disappear, and other suppliers will be partially affected, while entirely new opportunities to produce new parts emerge (Future of Canadian Automotive Labourforce Initiative, 2021).

The electric vehicle, the Jet Age, and the first iPhone were more than just “sustaining” improvements to previous architectures. Rather than refining and improving, these are the types of inventions that “disrupt, destroy, and render obsolete established competency” (Abernathy & Clark, 1985). As discussed in this chapter, the jet engine is based on different technological foundations: the piston engine is an intermittent internal combustion engine, whereas the jet engine is a continuous reaction engine. As a novel component, the jet engine had a substantial impact on the design of passenger airliners, which were previously powered by piston engines and propellers. The British Comet was the first to reach the market, but the Americans were more successful in incorporating this new component into an airliner’s architecture.

The iPhone tells a similar story. Apple accelerated the development of a key component of its smartphone with massive investments in capacitive touchscreen technology. In doing so, Apple also contributed to the development of the architecture adopted by the vast majority of smartphones today: the touchscreen slate.

In a nutshell, practitioners can design a disruption by introducing new qualities, such as new parts or features. As these new traits accumulate, the new design may lead to a new species, such as a new dominant design, product architecture, or product category. As an entrepreneur, the main task of the disruptor is to create and discover new things which did not exist up to that point. The disruptor is thus a leader: the disruptor creates new possibilities that will be further explored by a large number of “imitators”.

This evolutionary perspective of disruption, as outlined here, finds itself at odds with the dominant theory of disruptive innovation. Indeed, none of the instances presented in this discussion, including Apple, Boeing, Airbus, and the advent of the Jet Age, are recognised as cases of disruptive innovation. With The Innovator’s Dilemma, Christensen redefined disruption as a complicated model of intersecting performance trajectories, in which a smaller company or business unit is able to successfully challenge established incumbent businesses by following a very specific business strategy. This long sentence is just a partial summary of the larger set of premises that make up Christensen’s theory of disruption: as detailed in Section 6.2, Tellis (2006) has identified five core premises, which can be subdivided further into 12 sub-premises. Diagrams are often evoked for its explication (Figures 2.8.2).

Despite stark disagreements with Clayton Christensen’s disruption model, this research has striven to re-integrate disruptive innovation with its overlooked research tradition. Like Schumpeter, the innovation scholars that preceded Christensen were overtly evolutionary in their thought. Beginning with Abernathy and Utterback (1978), scholars have recognised that industries have evolved through different patterns of innovation. In nascent industries or market segments, innovation is more fluid, marked by the volatility of product designs. The optimal configuration is yet to be discovered and developed, resulting in a greater variety of form factors, dominant designs, and product architectures. This is exemplified in the diverse range of smartphone designs that were prevalent before the introduction of the iPhone (Figure 6.4.1).

Over time, the nascent industry evolves into a rigid, efficient production system specifically designed to produce a standardised product. In this environment, innovation is typically incremental in nature: “the markets for such goods are well defined; the prod­uct characteristics are well understood and often stan­dardised; unit profit margins are typically low; produc­tion technology is efficient, equipment-intensive, and specialised for a particular product; and competition is primarily on the basis of price” (Abernathy & Utterback, 1978).

Indeed, product standardisation and price-based competition are excellent descriptors of the current mobile handset industry. The prior diversity of form factors gave way to a single, dominant design: the touchscreen slate. As explained by Abernathy, this standardisation of product design changes the basis of competition:

Battles in the marketplace no longer are fought over the kind of thing a product is or even the kinds of things it should be able to do. The locus of competition shifts to what the product costs. Once the market decides that it knows what a word processor is — or a video recorder or a PBX exchange or an instant camera or, of course, a widget — the task of manufacturers gradually changes from defining appropriate design concepts to achieving efficiencies and economies in production. This is not to say that product innovation disappears entirely or that it ceases to be of value altogether. The point, rather, is that what product innovation there is tends to be localised toward the bottom of established design hierarchies and, as a consequence, to enjoy little market visibility (Abernathy et al., 1983, p. 24).

This notion of a design hierarchy or product architecture is thus crucial for understanding how disruptive innovations are designed. This distinction between the product as a whole and the product in its parts (the components) has a long history in the design literature (Henderson & Clark, 1990). To understand this, consider how products are constituted from a “design perspective”. For example, a room fan’s major compo­nents include the blade, the motor that drives it, the blade guard, the control system, and the mechanical housing (Henderson & Clark, 1990). Each of these are components, but how they are designed to work together is a fan’s architecture (Gans, 2016, p. 23).

According to the definition proposed here, practitioners can design disruptions by introducing “a new quality (such as a novel material, component, feature, or form factor) into an existing architecture”. However, some changes in a design hierarchy will prove more important than others and will attract a disproportionate share of attention: design concepts at or near the top of a design hierarchy, by virtue of their influence on product function and performance, will have greater competitive visibility than those at the bottom (Abernathy et al., 1983). That is, the higher in the design hierarchy these changes occur, the more trenchant the consequences (Clark, 1985).