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Innovation and disruption have been two of the more common buzzwords in the business world in recent years. But what do they really mean, and how do they relate to competitive intelligence?

There are certainly a lot of similarities between innovation and disruption. Both involve doing things in new ways, such as applying a new technology or pioneering a new business model. One important distinction is this: not all innovators are disruptors, but all disruptors are innovators.

Innovation is a crucial force in business, driving organizations forward by enabling them to better solve customer problems and address the needs of the market. Consequently, many organizations now have innovation teams responsible for driving new ideas and technologies. 

But innovation is not a purely internal force. With every innovation from your competitor, there’s a chance of disruption to your own business. Despite this, there’s often very little collaboration between intelligence teams and innovation teams, a strategic misstep that represents a major source of vulnerability for many organizations. 

In this article, we’ll explore the key distinctions between innovation and disruption, and share strategies you can employ in your organization to minimize your risk of disruption. But first, let’s share our definitions of the terms innovation and disruption.

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What is Innovation?

Innovation is the process of transforming an idea or nascent technology into a new product or service which provides value to consumers. Innovation can take many forms: it could be a new technology, like a self-driving car, or a new business model, like Airbnb’s peer-to-peer home rentals.

Innovations are often incremental: not every innovation will radically shift markets and redefine the way that people live. Innovation can be found in many places: from the cutting-edge research and development of exciting new technologies to the implementation of new processes in a supply chain.


What is Disruption?

Disruption occurs when a smaller organization with comparatively few resources finds a way to radically alter the paradigm of the market to offer customers increased value vs. current solutions.

Disruption is a type of innovation, and one that is much more powerful than incremental innovation. Disruptive organizations create novel business models and strategies that did not previously exist, delivering value to customers in an entirely new way. Many organizations see disruption as an existential threat, but managed right, disruption can also represent an incredible opportunity

Over time, disruptors improve product quality while maintaining the competitive advantages that enabled them to gain an initial foothold in the category.

Research from the legendary Harvard academic Clayton Christiansen discovered that disruption tends to begin in low-value market niches that existing players pay little attention to. Over time, disruptors improve product quality while maintaining the competitive advantages that enabled them to gain an initial foothold in the category. By the time disruption enters the mainstream, it’s often too late for established players to respond effectively.

Intelligence, Innovation, and Disruption in Practice

These days, practically every organization lives in fear of some new form of disruption that could upend their business. Key innovations from competitors––both established players and new entrants––represent the threat of disruption to your organization. Organizations typically take two approaches to address this: establishing a competitive intelligence team and building an innovation unit.

Intelligence teams serve to monitor the market and competitors, understanding new innovations, assessing external forces of disruption, and analyzing the impact of competitor or market movements on their own organization.

Innovation teams, on the other hand, analyze existing products, services, and systems to identify areas for improvement and understand opportunities for new solutions. These new concepts could be incremental innovations, or they could be disruptive innovations with the potential to alter the market landscape. 

The Silo Between Intelligence and Innovation 

In many organizations, intelligence teams and innovation teams operate in discrete silos, and often spend little to no time collaborating. When teams that should have a symbiotic relationship fail to collaborate, there are clear risks. 

In many organizations, intelligence teams and innovation teams operate in discrete silos.

It’s the role of intelligence teams to uncover patterns of disruption in the market and, when they discover them, it’s crucial that the innovation team know about them as soon as possible. The sooner innovation teams become aware of potential disruptions, the more time they have to prepare for disruption, and capitalize on any opportunities that this presents.

There’s little new, particularly in large organizations, about two business units that don’t talk to each other all that much. But when it comes to managing disruption, the potential downsides are too large to ignore this problem. There is a better approach to integrating intelligence and innovation: one that enables organizations to drive and capitalize on disruption, rather than fall victim to fast-moving competitors.

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Embracing a Joined Up Approach

In our modern day, fast-paced business climate, it’s more important than ever that organizations embrace a culture of intelligence. By increasing access to crucial market and competitive intelligence insights, organizations can embolden leaders across the business to make decisions with higher degrees of confidence. That’s especially important for innovation teams, which play an integral role in shaping the strategy of the entire organization.

It's more important than ever that organizations embrace a culture of intelligence.

Pursuing a radical cultural shift that emphasizes a hand-in-hand relationship between intelligence and innovation teams won’t happen overnight, but it’s an endeavor that will reap rewards for the organization for years to come. 

Fortunately, there are some best practices that help organizations accelerate their journey towards a more joined up approach that focuses on intelligence, innovation, and disruption. Let’s explore them:

1.  Actively Build an Intelligence Culture

In a truly intelligent organization, insights come from everywhere, not just from the intelligence team. In fact, in a recent episode of The Gambit Podcast, our guest Troy Pfeffer argued every single employee should play a role in building an intelligent company

There’s a variety of ways to nurture the formation of an intelligence culture:

  • Encourage leaders to model the behaviors they should encourage in teams.
  • Build thoughtful recognition and reward stems that incentivize behaviors that drive cultural change.
  • Emphasize that team members must contribute to intelligence efforts if they want to consume intelligence: it’s surprising the level of insights that are already resident in many organizations in an unstructured form.

To learn more, check out this article from Cipher’s President, Peter Grimm: How to Build a Competitive Intelligence Culture

2.   Embrace Market and Competitive Intelligence Technology

One of the greatest challenges to establishing a joined up approach to dealing with market disruption is ensuring real-time visibility of important intelligence. In the past, this was achieved with periodic intelligence reports sent to organizational leaders. However, with the speed of innovation and disruption in our modern era, this practice no longer cuts it.

With the speed of innovation and disruption in our modern era, “period intelligence” no longer cuts it.

A better approach leverages market and competitive intelligence platforms to source, discover, and share competitive intelligence insights in real-time. Platforms like Knowledge360® feature real-time dashboards that share the latest information on key competitors, market trends, and disruption indicators. Organizations can configure their platform to track competitor innovations, receiving alerts for events like the granting of a new patent, a submission to a regulator, or even a key leadership hire.

Embracing this kind of technology has major benefits for organizations. Teams receive access to powerful intelligence in real-time, giving leaders significantly more time to react to disruption. Anyone in the organization can upload critical pieces of intelligence, and decision makers benefit from a real-time view of the market as they dictate innovation and strategy.

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3.   Monitor Patterns and Indicators of Disruption

Disruption, by its very nature, is somewhat unpredictable, but business strategists have pioneered a variety of frameworks that organizations can use to better anticipate and respond to disruption.

These include frameworks that organizations can use to determine how vulnerable they are to disruption, like Cipher’s framework for identifying vulnerabilities, threats, and opportunities.

Other examples of notable frameworks include Deloitte’s Nine Patterns of Disruption, which outlines nine different strategies that disruptors commonly execute to build competitive advantages against incumbents. Another example is the MIT Sloan’s 11 Macro Sources of Disruption framework, which outlines eleven key areas of the macro-environment that organizations should monitor in order to better anticipate disruption.

Start Refining Your Approach to Innovation and Disruption Today

Innovation and disruption are at once both existential threats and incredible opportunities for organizations in practically every industry. Often, the line between success and failure is thin. But organizations that embrace the best practices outlined here, and work with experts to improve their approach, have a significantly higher chance of capitalizing on disruption.

Cipher’s team of competitive strategy consultants is here to help. With experience working in a wide variety of industries, including insurance, life sciences, and consumer packaged goods, our competitive intelligence consulting team provides invaluable guidance in building a lasting culture of intelligence.

To learn more about how they can help your organization, schedule a call today.…

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