Innovation and Disruption in Business

Business innovation involves creating and launching new products, services and operational frameworks. These novel inventions disrupt existing processes and address customers’ evolving needs. For example, the car manufacturer Mercedes-Benz created a new digital product development system that increased efficiency and gave customers more options to personalize their vehicles.¹

Many companies want to innovate and create a culture of continuous improvement. According to a survey by the Boston Consulting Group, 79% of businesses see innovation as a top priority, and 66% plan to spend more money on innovation in 2023.² Examine the overall impact of business innovation and disruption, practical strategies for developing disruptive processes and the ethical considerations of creating and releasing new solutions.

Innovation is the process of developing creative and revolutionary solutions to business challenges and customer needs. According to McKinsey, the most innovative companies share eight characteristics and behaviors:¹

• Aspire: The organization aims to achieve innovation-led growth
• Choose: The company chooses to invest appropriate resources into innovation
• Discover: Research and development initiatives translate into actionable solutions
• Evolve: The business continually updates its business models to find new profit sources
• Accelerate: The organization develops fast and efficient processes for creating innovations
• Scale: New products and services get launched at the correct scale
• Extend: The company builds an external network of collaborators and stakeholders
• Mobilize: Staff have the motivation and resources to innovate continually

Companies that master the principles of innovation have the potential to earn profits that are 2.4 times higher than their competitors.¹

People often associate disruptive innovation with ground-breaking products, but this transformative process takes several forms, including:³

• Product Innovation: The development of novel or significantly improved goods or services
• Process Innovation: The creation of new production or distribution methods
• Organizational Innovation: Disruptions in existing business processes or policies that increase profits or productivity
• Marketing Innovation: New pricing, product design or promotional strategies

Disruption occurs when companies create a novel business model, product or service that carves out a new market section. Typically, small businesses set their prices low to enter the bottom of the market where they have few competitors. Then, their disruptive technologies or services attract many customers, leading them to higher profit margins that allow them to grow quickly and displace more established companies.⁴

For example, Netflix’s innovative streaming service appealed to customers who wanted to consume content on demand, displacing major video rental companies. Similarly, Uber’s ride-sharing service disrupted the traditional taxi market by providing more convenience and better customer service.⁴

Several factors motivate business innovation and new market disruption, including:⁵

• The emergence of digital technologies, such as artificial intelligence (AI) and smartphones
• Customer demands for affordable products
• Many companies’ adoption of more dynamic capabilities that support innovation

Companies and leaders use many techniques to drive business innovation and embrace disruptive technologies. Consider the following:

The innovation process often starts with market research. This step involves collecting data about competitors, client needs and industry trends. For example, an organization can use the Qualtrics survey tool to gather product feedback and upgrade their products to better serve customers.⁶ Tracking industry trends can also help businesses learn about new disruptive technologies early.

Businesses can foster innovation and creativity by encouraging design thinking. This method approaches product development from a human-centered perspective. Professionals use empathy to identify problems and collaborate with users from diverse backgrounds to brainstorm solutions. Design thinking also involves testing prototypes and making adjustments based on user feedback.⁷

Corporations can collaborate with startups and other external partners to accelerate business innovation and product development. In this type of arrangement, larger companies lend their customer base and resources, while startups can provide the fresh ideas needed to create new products and services. These partnerships shorten the innovation cycle and allow startups to scale up their production.⁸

Innovation management refers to planning, implementing and allocating resources for innovation. Organizations can use strategic planning to improve innovation management and ensure that novel ideas align with their business goals. Strategic planning steps for sustaining innovation can include:⁹

• Ideation
• Portfolio planning
• Creating roadmaps
• Prioritizing objectives
• Budgeting

Many businesses have achieved success through business innovation and disruptive technologies, including incumbent companies:

• Apple: The invention of the iPhone revolutionized the user experience by giving customers a new way to access the Internet⁴
• Airbnb: This digital platform transformed the hospitality industry by enabling peer-to-peer accommodation rentals⁴

Businesses that want to embrace innovation may face many challenges and risks, such as:¹⁰

• Fear of failure or mistakes
• A rigid workplace culture that discourages innovation
• Lack of innovation management structures
• Resistance to change

Companies can overcome these challenges by creating guidelines for innovation and viewing mistakes as a necessary part of the creative process.¹⁰

Innovation and disruption can raise many ethical and legal dilemmas for companies that executives and employees need to keep in mind.

Intellectual property laws protect the unique inventions of companies and individuals. Companies can protect their intellectual property by trademarking logos and symbols, patenting products and copyrighting creative works. They can also avoid infringing on the intellectual property rights of others by auditing their competitors’ creations.¹¹

Many companies have started using AI to develop new products, processes and business models. Strategies to use this technology ethically include:¹²

• Conducting impact assessments to make sure that AI-powered innovations don’t cause harm
• Implementing data protection measures
• Collaborating with scientists and technologists to develop ethical standards

Prepare to use emerging technologies and cutting-edge strategies to become a leader in business innovation. Yeshiva University’s online MBA program gives you the tools to thrive in the rapidly evolving business landscape. You’ll network with alumni and faculty who have worked with some of the most innovative companies worldwide, such as Boeing and Google. Our curriculum will also teach you valuable innovation skills, including conducting market research, managing organizational change and implementing new marketing technologies.

Make your career advancement a priority today by scheduling a call with an admissions outreach advisor.