GP The Panel 7: What is disruptive innovation?

This piece first appeared in the Guernsey Press on 12th March, 2019.

Q: I keep hearing innovation being referred to as ‘disruptive’ - what does this mean?

The term ‘disruptive innovation’ was first coined more than 20 years ago as a way of describing ‘innovation-driven growth’ but has become popularised in recent years as technological developments have increased the rate and scale of change.

Innovation is typically disruptive when it causes a radical shift - either in an existing industry or by creating an entirely new industry or market. 

Importantly, though, not all innovation is inherently disruptive; and the tipping point is probably the biggest cause of disagreement. In other words, just because a new way of doing things is innovated, even if it causes considerable change - does not automatically mean it is disruptive. The originators of the term often refer to Uber as not being disruptive - despite the wide-reaching impact it has had, Uber is nevertheless operating (and innovating) within the well-established the taxi industry, but not disrupting it. 

Perhaps the simplest example is in the humble smartphone. The iPhone when it launched was undoubtedly revolutionary; but within the mobile phone industry was not intrinsically disruptive - it was, fundamentally, still a mobile phone. However, the smartphone was, over time, highly disruptive within the portable computing, handheld gaming and digital photography industries.

For industry in Guernsey and for Guernsey as a jurisdiction, innovation should be amongst the top three priorities on the board agenda.

Nevertheless, the distinction between innovation and disruption is important and one which we must remain watchful over; either in terms of opportunity for disruption - or, conversely, from the threat of disruptors entering the market.

One need look little further than disruption in the content delivery industry - the Netflix vs Blockbuster effect - to understand just how important this is.