Harvard Business School professor, Clayton Christensen, is credited with coining the term "Disruptive Innovation". It's an innovation that is originally birthed at the bottom of the market, usually as a substandard product, but moves rapidly up-market, eventually overtaking and obliterating the established competitors.
Think of it this way: a manufacturer of camera film finds out about a competitor who has a new digital photo development process (requiring no film, just some sort of digital media). This large film manufacturer investigates the new technology, but finds it an absurd investment: the equipment to manufactur is extraordinarily expensive; the digital cameras are outrageously priced; and the photo quality is laughable. All in all, a distinct step down from the relatively high picture quality and reasonable price of their current film products. And, frankly, it makes no sense to spend a great deal of money to invest in a product that's a step down in every way from your current product, right?
You tell me; should our hypothetical film manufacturer have made a complete strategy shift, and embraced this new digital technology, even though it was substandard? In hindsight the answer is painfully obvious; and if our hypothetical manufacturer failed to embrace digital photography, he's likely out of business today. Think of disruptive innovation as something that seems substandard in every way, but comes from nowhere and, over time, takes over the staid, tried and true methods and products, turning entire industries on their proverbial ears.
Now consider with me, for a moment, a management innovation--like Self-Management. It's a revolutionary way of organizing that can bring enormous benefit to the organization that embraces it. But imagine a large organization, with detailed organization charts, chains of command and reporting structures. To a leader in that organization, moving to a structure with no hierarchy, no rigid chains of command and fluid job descriptions, must feel like taking something that is neat and organized and making it messy, murky and difficult to manage. To that leader, embracing Self-Management isn't a sound strategic course of action.
But place this organizationl tool in the hands of an entrepreneurial firm, an innovative company eager to embrace any meaningful competitive advantage and they'll trade rigid chains of command, multi-page organizational charts, multiple layers of management, and bureaucracy for something difficult to describe in a picture, with a complex network of bidirectional reporting relationships, but which makes for a lean group of colleagues who can execute in a blink of an eye. And our entrepreneurial firm will overtake the professionally managed organization, all else held equal, by the strength, flexibility and power of their organizational model.
That's disruptive management innovation.
