Disruptive innovations are reshaping the global economy, at Fortune 500 Companies and at the macro-economic level. According to Deloitte’s 2013 shift Index, the average life expectancy of a Fortune 500 company was 75 years half-a-century ago but today is less than 15 years. And the life expectancy is heading towards five years if nothing is done.
The problem with today’s thinking. Organizations’ strategic vision is often unsatisfactory. Internally, focusing too much on alignment and short-term results will help the balance sheet, but changes in the industry will blindside the firm sooner or later. Externally, too much attention to the adaptability side of the equation, including adequacy and verisimilitude, means building tomorrow’s business at the expense of today. In The Innovator’s Dilemma, published in 1997, Clayton Christensen – Harvard Professor– pinpointed the reasons that so many companies fail. ‘In this revolutionary bestseller, Clayton Christensen demonstrates how successful, outstanding companies can do everything “right” and yet still lose their market leadership – or even fail – as new, unexpected competitors rise and take over the market. Why? Because the inner technological capabilities of established organizations have been arguably altered/held up by board member decisions hindered by cognitive limitations i.e. decision-making heuristics of managers e.g. expertise, experiences, networks, company contract ties that build upon efficiency. What is the solution? The solution is to reconcile organizations with their technological potential, legitimately available for disruptive innovation absorption, by providing, in a systemic manner, a workable diagnosis and absorption framework which is non-judgmental.
Extension of Clayton Christensen’s Principles
Researchers have been able to dissect the relationship between explicit knowledge (the patent and its procedural knowledge) and tacit (indigenous) knowledge. This knowledge is classified into know what, why, how. Subsequently, it is possible to reconstruct the historic/economic trajectory of any organization and build a definite/unique knowledge space.
Researcher and practitioner reconciled dialogue: The path dependency
The definite knowledge space is composed of myriads of cubes of knowledge on the spectrum of core technology and product attributes. Its scientific visualisation allows us to quantify “quality” and simultaneously create mechanisms for diagnostics and arbitrage between decisions taken over the course of the history of established organizations and by comparison the true technological ability. Indeed, most Fortune 500 Companies have encountered dramatic changes along the course of their histories, nevertheless a path dependency remains.
Complexity vs. Rationality: The cognitive distance to innovation is scientifically identifiable and therefore quantifiable, and therefore compatible with business language
Upon the aforementioned “Path dependency”, sociological science of knowledge provides the tools to apply a generation-recombinant. In other words, this is a sectional deconstruction of the existing model that is then complemented with new knowledge that combines disruptive patterns with a different set of performance outcomes. This extracted knowledge is later classified as modular, fungible or excluded.
The Unified Model: ‘Disruptive Innovation Absorption Methodology’: K³.P.I.
Disruptive innovation methodology is a cognitive distance computation of the external, tacit and public “know what” stretched by the “why” and the “how.” The combined factors offer the opportunity to explore definitively, quantifiably and measurably for perhaps the first time. This translates into business language with the scientific equation of K³ey Performance Indicator℠.
By the same token, the unified model advocates the pluralistic nature of the board, simultaneously presenting tangible choice(s) and the ability to undertake or postpone in the name of tractability, fueled by further market consolidation, such as with a new paradigm of fertility vs. volatility, consumer behavior to-date etc.
Its use offers Fortune 500 type companies the opportunity for long-established legitimate authenticity in their respective industries, to mature disruptive models repetitively, to opt out of “false” sustainability, albeit appearing as compliant with the established rules of risk management, repositioning the importance of sustaining innovation, and inter-industry endeavors.