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Strategy & Innovation

May, 2012, Volume 10, Number 2

The Disruptive Innovation Awards: Celebrating the Common Patterns of Disruptive Thinkers

By Evan I. Schwartz


Craig Hatkoff (center) with Justin Bieber and his manager Scooter Braun

Most awards shows bestow on recipients a finely crafted statue. Not the Disruptive Innovation Awards. Honoring simple, low-end advances that open new markets, this program presents silver hammers that can be bought in bulk at Home Depot.

For the third annual installment, hosted at NYU's Stern School of Business, hammers were handed out for a wide range of innovations that are transforming everything from robotics to financial transactions to education to the discovery of new artists.

Craig Hatkoff conceived the awards as part of the Tribeca Film Festival, which he co-founded in 2001. He compared disruptors to Davids who devastate Goliaths with tools that hit in just the right zone of vulnerability. In founding the awards, he was inspired by the theories of Innosight cofounder Clayton Christensen, who was on hand to help connect all 29 winners to three common thinking patterns:

A passion for making things simple in a new way

As Christensen put it, organizations grow big by centralizing production of complex, expensive products. This was true for everyone from integrated steel mills to mainframe computing firms to big banks to media conglomerates to large universities. Inevitably, though, they end up getting disrupted by simpler and seemingly inferior products.

A case in point is Jack Dorsey, founder of Twitter and Square, who received a lifetime achievement award. Twitter famously disrupted the news business by reducing communications to only a headline and a link. It suddenly became simple to share or create your own headlines using just a few finger taps. "The best technologies, simple technologies, help us realize that we are born with everything we need," Dorsey said. "You see this with the iPhone and the iPad, we're using our fingers, not using our abstractions any more. And we must keep removing abstractions."

This kind of simplicity ends up leading to disruption. At first scorned by the news business, Twitter soon became indispensable as hundreds of millions of consumers became producers too. Only when the free service gained critical mass was it able to start grabbing advertising dollars—an estimated $250 million last year—via promoted tweets and accounts.

An eye for making things accessible to new groups of people

As with Twitter, those simpler products end up appealing to brand new categories of consumers "on the periphery," said Christensen. For his next disruption, Dorsey is building Square into a simple payment platform, by giving away millions of plastic credit card readers that plug into smart phones—enabling new groups of people from babysitters and dog walkers to easily accept credit cards. Under Square's business model, it collects transaction fees of 2.75%, much of which gets paid out as interchange fees to banks. But as its base of users grows, it can move upmarket into the heart of the banking business. What began as a simple system ends up taking on the complex.

A willingness to challenge your own assumptions

Yet more and more, as Hatkoff noted, it is the Goliaths that are learning the ways of disruption. Large enterprises are starting to embrace these lessons before others get the chance to do it to them.

For instance, MIT won a silver hammer for catapulting its famed Open Courseware concept of providing free access to teaching materials into MITx, which actually provides MIT engineering courses online for free.

Other times, it is the big organizations working in conjunction with startups that generate breakthroughs. DARPA, the U.S. Defense Dept.'s R&D program, won a hammer for creating Cheetah, which set a robot record by running 18 miles per hour on its flexible feet. Developed along with Boston Dynamics, the cat-like machine is aimed at disrupting the high cost of deploying humans in war zones, just as low-cost unmanned drones have taken on many of the jobs of multi-million dollar fighter jets.

But the biggest hoopla of the show was reserved for Justin Bieber, the tween singing phenom who burst on the scene due to a vocal performance in his living room posted on YouTube. Co-recipient Scooter Braun said he noticed that "the kid's got soul," and he persistently called and "stalked" the kid until he gained enough trust to forge a management relationship.

The Bieber story not only shows how sourcing talent can be disrupted but also how relationships with fans can be transformed via platforms like Twitter. On average, Bieber's feed attracts one new fan per second, and it surpassed 20 million followers this spring.  

By the end, the 90-minutes awards ceremony (which can be seen as a stream here) brought new clarity to the meta-patterns of disruption. Wrapping it up, Christensen concluded by hinting at how the some of the biggest players in the most intractable industries (such as healthcare) would become the next Goliaths to either fall or take part in disrupting themselves.

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I think Clay Christensen's disruptive innovation concept is the single most powerful investment strategy that I've ever seen.

William Hambrecht
CEO, W.R. Hambrecht

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