The Way To Innovate To Beat Radical Discontinuity
By Mark Johnson
In the early 19th century most people lit their homes with lamps that burned whale oil. In mid-century a Canadian physician and geologist named Abraham Gesner developed kerosene, a cleaner-burning alternative made from a newly plentiful resource, crude oil, and founded what became the modern petroleum industry. Whaling, which had been a major world industry, ceased. Then Thomas Edison threw a light switch, and the world changed again. No one wanted the foul smell and dangerous flame of kerosene lanterns in their homes when they could have clean and easy electric light. Demand for fossil fuels plummeted, and they rose again only when Henry Ford came along and made the new technology of automobiles affordable for the masses. Today the ramifications of global warming threaten the automobile, electric power and oil industries.
The history of business is full of such stories, and they can strike fear into anyone who innovates to try to keep up with, or ahead of, markets. The idea that unpredictable, revolutionary forces that lie outside those markets can sweep away entire industries is terrifying. Even within an industry an agile disrupter can come along and overturn everything for those who were there before. And then there are those larger non-technological discontinuities such as the 9/11 attacks or the global financial crisis of 2008.
How can a business meet such unexpected threats? In my forthcoming book, Seizing the White Space: Business Model Innovation for Growth and Renewal, to be published by Harvard Business Press in February, I talk about how businesses can innovate their existing business models in response to radically changing conditions or develop new units with different business models entirely.