1.1 Introduction: incremental change versus disruptive innovation
The concept of innovation is not new to the marketplace. A review of the history of civilization shows many changes in technology, design, markets and marketing, distribution and business structure. Innovation to meet these changes is expensive; in healthy economic conditions it prospers whilst in difficult times it moves to the back burner of tactical corporate strategy. In the field of textiles, innovation has resulted in a wide range of natural and synthetic fabrics that are lighter, smarter, multi-functional and with a wider range of engineered properties.
Over-arching terms in the field of innovation have been used by many business writers, academicians and industrialists to define the process of innovation. A number of years ago Harvard Professor Clayton M. Christensen wrote The Innovatorâs Dilemma (1997), a book followed by a number of others that redefined innovation for other educators, students and the business community at large. Christensenâs ideas on innovation help to explain why successful, competently managed companies can trip up even when they are in tune with their customer base and invest in leading technologies.
Christensen called changes that seep into the marketplace as continual product and process renewal âincremental changeâ, such as the introduction of individual new fibers, yarns and fabrics in the textile industry. Such an example would be the use of stretch yarn, from the early introduction of Spandex (an anagram of the word expands), to Lycra or elastane. Lycra, invented by DuPont chemist Joseph Shivers in 1959, is stronger and more durable than rubber and is known for its exceptional stretch and recovery properties (elasticity). These new fibers allowed companies to extend existing product lines and applications. Many companies have proved adept at anticipating and making these incremental changes.
Christensen contrasts incremental change with âdisruptive innovationâ. This happens when what Christensen calls disruptive technology enters the marketplace, often developed by a new player unbeknown to the leading companies. Disruptive technologies create a new value proposition in the consumerâs mind that overturns the perceived value of existing products. An example in textiles is the introduction of man-made fibers in the last century. Their introduction transformed a marketplace that had been dominated by natural fibers. It led to a completely new generation of fibers and applications as well as an entirely new set of textile companies in the market.
The concept of disruptive innovation has changed the basic concepts of strategy. Strategy is traditionally rooted in supply and demand conditions, and in concepts such as market share and competitiveness against existing rivals in the marketplace. This concept of strategy no longer applies when disruptive innovation makes both an existing company and its competitors irrelevant. Traditional concepts of strategy need to be replaced by a concept such as âblue oceanâ strategy proposed by Kim and Mauborgne (2005). This strategy suggests that companies can create a space in the marketplace that did not previously exist, a blue ocean, in contrast to more traditional companies operating in an established market, the red ocean. The red ocean is everything that currently is in existence.
These concepts of disruptive innovation and the need for a blue ocean strategy are endorsed by key figures in business today, such as Lou Mulkern, editorial director at DBA Public Relations in New York, one of the countryâs premier PR agencies specializing in consumer electronics. He has been involved in the hightech PR business for more than 25 years as both a journalist and PR executive. He has worked with global companies such as Toshiba, TDK, Amazon, Newegg (the second-largest online-only retailer in the US), and others to help refine and communicate their key messages.
Mulkern states that in the PR and media business, people are fond of saying things such as âperception is realityâ. However, in press releases for his clients, touting their new products or services, Mulkern maintains that he always tries to resist the urge to use words such as âinnovationâ and âinnovativeâ, so as not to dilute their impact; that is, unless the products or services truly live up to the high standard of innovation. âInnovation is actually a very specific quality,â he notes, âand it should be reserved for things that really offer people something new and exciting in their livesâ (Mulkern, 2009). Mulkern links innovation with leadership. A company that truly innovates, either by creating âfirst-everâ type products or providing ahead-of-the-curve services, is, by definition, also a company that exhibits leadership. In this way, leadership and innovation are really inseparable. From a PR perspective, both are very highly sought after qualities for businesses.
True innovation of this kind is hard to define. In this respect Mulkern refers to US Supreme Court Justice Potter Stewart, who famously attempted to explain the meaning of pornography in 1963 with the words, âI shall not today attempt further to define it ⌠but I know it when I see itâ (Concurring, Jacobellis v Ohio, 378 US 184 (1964)). Innovation of this kind is about changing the rules of the game. An example is a manufacturer such as Toshiba and a product such as the DVD. With its combination of dramatically increased functionality and convenience, this new technology automatically rendered existing technologies (such as VHS) obsolete and created new possibilities in the market.
One of the companies that Mulkern has worked with that he states really takes innovation to heart, is Toshiba, whose corporate slogan is, in fact, âLeading innovationâ. He notes that Toshibaâs commitment to innovation goes back over a hundred years. One of the companyâs founders, Hisashige Tanaka, is revered in Japan as a quintessential inventor and innovator. He became famous for creating intricate mechanical dolls, as well as a perpetual or â10 000-yearâ clock that is still on display at the Science Museum in Tokyo. He also built Japanâs first working model of a steam locomotive. The company he founded in 1875, Tanaka Engineering Works, manufactured electric bulbs, cables, prototype telephones, industrial machinery and other products, later becoming todayâs Toshiba. The companyâs many innovations include the release of Japanâs first rice cookers in 1955 and the DVD in the mid-1990s, as well as breakthroughs in IT and communications, laptops and mobile computing.
Mulkern believes that manufacturers such as Toshiba, who are serious about innovation, need, like Tanaka Hisashige, to be endlessly inventive with a fascination for what technology can do. More than that, however, they need to be focused on how developments in technology can make life easier, more fun or more efficient. Innovation without a clear understanding of how the design of a product and its capabilities will benefit consumers â like that original rice cooker â will simply not be adopted by consumers.
This interest in, and willingness to embrace, the new means that innovative companies need to adapt and change continually. Some of the most durable and successful companies today are nothing like they were when they were founded. Take, for example, IBM (International Business Machine), 3M (Minnesota and Mining) or even retailers such as the Dayton-Hudson Corporation, now operating as Target.
The International Business Machine Company (IBMÂŽ) was founded in 1896 as the Tabulating Machine Company, a company that produced one of the first generation data processing machines. Today IBM is one of the worldâs most valuable brands, second only to Coca-Cola, and the worldâs fourth largest technology company. With 400 000 employees worldwide, IBM is the second largest (in market capitalization) and the second most profitable information technology and services employer in the world according to the Forbes 2000 list, with sales of greater than 100 billion US dollars.
The Minnesota Mining and Manufacturing Company was founded in Two Harbors, Minnesota in 1902, later becoming 3Mâ˘. The companyâs roots were in mining stone from quarries for use in grinding wheels. Today they are known for a wide range of innovative products that began with their first exclusive product: Three-M-ite cloth. Today the company has over 76 000 employees that produce over 55 000 products. 3M has operations in more than 60 countries and its products are available in more than 200 countries (Fig. 1.1).
1.1 3M⢠products (courtesy of the 3M⢠Corporation).
The Target Corporation (Target) was founded in Minneapolis, Minnesota in 1902 as the Dayton Dry Goods Company. It became one of the pioneers of discount merchandising, opening its first Target discount store in 1962. In 1966 it branched out into discount book selling. Through growing expertise in sourcing and buying in bulk, strong financial control and acquisitions, the Target subsidiary grew to dwarf and absorb its parent company Dayton Hudson, becoming the Target Corporation. Target today is the second largest discount retailer in the US, behind Walmart, ranking 28th on the Fortune list of 500 leading US companies. Among other achievements, it has become the largest hardcover book seller in the US. The company now provides design services (Target Commercial Interiors), has a major online presence and manages a global private label business. Target retail stores are typically spacious, feature in-store dining facilities and include grocery departments, e-trade locations, pharmacies, pre-packed deli items and a wide range of other product lines in well-designed, shopper-friendly environments. Target has traditionally been more successful in the field of affordable fashion than its rival Walmart, which has had to continually replace its design and merchandising team.