The Electric Light Did Not Come From Continuous Improvement of Candles Oren Harari
Oren Harari is quoted as stating the above about Edison's invention of the electric lightbulb. This could be considered an early example of disruptive innovation.
Disruptive innovation is aninnovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances.
21 years ago, Clayton M. Christensen and Joseph Bowers co-wrote the articleDisruptive Technologies: Catching the Wave and coined the phrase 'disruptive technologies'. Over the last 20 years the phenomenon has been studied and analysed in much greater detail and the terminology evolving to be more widely known as disruptive innovation. This terminology, like many things in the pharma and biotech world, has only relatively recently become a more common phrase used.
In May 2016, I attended a Global Strategy Meeting in Copenhagen. One of the speakers, Per Sundin - a music industry executive - told the story of how disruptive innovation [downloading music] changed the way the consumer and industry viewed music ownership. Per's presentation was one of the most insightful and honest stories I have heard in years and one lesson he shared resonated strongly with me. That lesson was:
" The first mistake we made was trying to defend our existing business model "
Why? If a new market disruption occurs and its product (or service) fits a new or emerging market segment that is not being served by existing incumbents in the industry why would pushing your model resist the one that is offering more value? This simple idea has stuck in my mind and I often pose the question: In pharma are we trying to defend an outdated business model? More importantly, where will our 'Pirate Bay' or 'Spotify' come from and are we ready to compete?
Who in Pharma is more likely to bring disruptive innovation into play? Small to Medium-sized or Big Pharma? Big Pharma have long defined their model and value markets, while many small to medium sized organisations try to emulate this existing model as the returns are there to be seen. However, in all market access forums, product launch teams, and even as early as product development the subject of value is raised. More precisely, the challenges faced globally in terms of cost controls, value proposition and profitability are discussed. No one wants to be the next EpiPen or named for excessive price increases.
What can we learn from other industries about disruptive innovation? From music, automation, travel, photography? Does anyone remember Kodak? When was the last time you searched for a CD rather than scrolled through your smartphone looking for that song you love? If your company put them on the car policy would you choose a Tesla over a BMW? Disruptive innovations often answer problems we didn't know we had.
Is disruptive innovation more than just an 'on trend' phrase or can we integrate the concept into our strategic approach? In a recently published HBR.org article Mark Bonchek and Barry Libert wrote that to change your strategy, first you need to change how you think. If everyone is looking for disruptive innovation – ultimately a disruptive business model, then the model is only one part of the equation. Bonchek & Libert go on to highlight that equally important is themental model behind the business model, as well as ameasurementmodel for both. It's the combination of mental, business, and measurement models that allowsreal transformation to occur. You could call it, say, disruptive innovation…
I believe disruptive innovation is part of change. We must embrace the change concept mentally, understand the opportunity that 'disruption' presents and then motivate ourselves and our teams to adapt and embrace it to benefit. No strategy is well implemented if there are no believers. Ultimately how can we be the drivers of disruptive innovation – change – if we spend so much time defending how we currently do business and deliver our incremental improvements to Patients, HCP's and Payers?
I'd love to know your thoughts on disruptive innovation and the pharma industry. Where do you see it coming from? How can we better prepare to see it coming and ultimately respond? Please feel free to comment below...
Author: Chris Easton - Global Pharma Marketing Leader, Strategist & Business Unit Head, May 2017
Source: https://www.linkedin.com/pulse/electric-light-did-come-from-continuous-imrovement-candles-easton
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