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The Power of Disruptive Innovation


Introduction
 
In today’s accelerated business cycle, the future of every company is determined by its ability to innovate effectively. Organizations that initiate the innovation curve for new markets often become leaders in those markets, gaining first-mover advantages and early leads in market share, brand awareness, and expertise. There are two distinct categories of innovation: sustaining and disruptive.

Sustaining Innovations

Sustaining innovations improve the price/performance provided by existing products or services. These innovations are incremental year-to-year or generation-to-generation improvements that companies introduce to remain competitive and increase their existing customer base.

All market-leading companies excel at delivering sustaining innovations. To maintain competitive advantages, they have fine-tuned the technical and marketing processes to drive value in a given market. In addition, by capturing market share in the early stages of market development, industry leaders are able to feed the investment and accelerate the delivery of sustaining innovations, creating significant barriers to entry. By their very nature, new entrants simply do not have the customer base, brand, or resources to compete directly and profitably with incumbent leaders. For these reasons, it is nearly impossible for a new entrant that is employing a sustaining innovation strategy to effectively compete and capture a leadership position in an established market.

Disruptive Innovations

Unlike sustaining innovations, disruptive innovations do not add increased performance to an existing class of products or services. Instead, they target performance needs that lie below the current performance standards set by established market leaders, leveraging similar core technologies or services to provide significantly less expensive, simpler, and more convenient solutions. Over time, disruptive innovations can improve to a point that they can capture significant share of the established mainstream market. More significantly, these innovations actually expand the overall size of a given industry by providing access to core technologies and services that previously were not available to a broad base of less demanding customers.

Ultimately, disruptive innovations provide access to a greater potential revenue source for all organizations following the disruptive path.

Office Document Solutions: The Disruptive Opportunity

For companies in the mature office equipment arena to enjoy continued growth and success, disruption in a new market is a critical path. The greatest disruptive opportunity available to today’s office equipment providers is with office document solutions.

In a direct comparison with established players in the IT industry, office equipment vendors may seem unable to compete in terms of products and technical expertise. Nevertheless, such a comparison overlooks the strengths of those same vendors when applied to the needs of small and medium-sized businesses (SMBs) as well as large independent enterprise workgroups.

By offering lower-cost solutions that provide unique value, convenience, and ease-of-use to SMB customers, office equipment vendors can effectively and profitably capitalize on the document solutions opportunity. MFP and appliance-based document solutions offer a new value proposition that focuses on unique, distributed applications for routine document processes, enabled at substantially lower costs than traditional document management solutions.

MFP and appliance-based document solutions provide unique value as intelligent, distributed resources, with low cost and sufficient performance for workgroups and departments. This makes these solutions particularly attractive to SMBs that cannot utilize or financially justify the comprehensive features of traditional vertical line-of-business and enterprise IT solutions.

The synergies between the attributes of these document solutions and the value and performance demands of underserved IT customers are a ripe combination for creating a new, disruptive market segment.

The preceding text was excerpted from the CAP Ventures whitepaper entitled Office Document Solutions: Blazing Trail of Disruptive Innovation. The complete report is available immediately. To learn more about the report or to make a purchase, please contact Alison Hipp at , ext. 126.


 

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2011 InfoTrends