Research Summary: “What 40 Years of Research Reveals About the Differences Between Disruptive and Radical Innovation” By Christian Hopp, David Antons, Jermain Kaminski, & Torsten Oliver Salge, RWTH Aachen University Faculty of Business and Economics for Harvard Business Review (2018)
“If you went to bed last night as an industrial company, you’re going to wake up this morning as a software and analytics company.” – Jeff Immelt, former CEO of General Electric
“Software is eating the world.” – VC investor Marc Andreesen
At Issue: The second wave of digitization is poised to disrupt all spheres of the modern economy. Yet, despite digitization’s unprecedented scope and momentum, many organizational decision-makers remain unsure of how to approach technological innovation. To begin with, organizational leaders need to recognize the fundamental differences between disruptive and radical innovation.
Research Objective(s): The researchers’ objective was to perform a meta-analysis of the existing research on innovation, in order to ascertain further insights on the fundamental nature of innovation itself.
Scope: The scope of this study was existing innovation research conducted across a 40+-year span of time (1975 to 2016).
Approach: The authors of this study conducted secondary research by completing a systematic review of the existing research on innovation. Using qualitative and quantitative methods, the researchers analyzed and organized 1,078 articles published on the topics of disruptive, architectural, breakthrough, competence-destroying, discontinuous, and radical innovation. The researchers utilized topic-modeling and community detection algorithms to determine correlations among topics and phrases in the subject documents.
Findings: Disruptive innovation and radical innovation are the two topical areas linked to the largest number of other innovation-related topics.
- Disruptive innovation occurs when new entrants challenge incumbent firms, often despite inferior resources. Disruptive innovation occurs not by the use of innovative technology alone, but rather in combination with business model innovations.
- Radical innovation occurs internally within organizations, and involves the creation of new knowledge or successful commercialization of completely novel products and ideas.
Disruptive innovation is inextricably linked to business model variations and encroachment on dominant competitors from the low end of the market. Radical innovation is dependent on internal organizational capabilities and individual and organizational human capital. While disruptive innovation typically involves better recognition of customers’ needs, radical innovation may involve displacing current products, modifying relationships between customers or suppliers, or creating completely new product categories. Topically, disruptive innovation is correlated with new business units and new business models, while radical innovation is correlated to the topics of organizational culture and capabilities, social and human capital, and project management. Disruptive and radical innovation are often conflated by organizational decision-makers, despite clear evidence that these different types of innovation are caused by very different mechanisms and require distinctly different organizational strategies to respond. Incumbent firms that are very effective at radical innovation are more likely to succeed in warding off credible threats posed by disruptive innovation.
Notes: The full text of this study can be accessed here.
Keywords: disruptive innovation, radical innovation, business model innovation
Researcher Profile: Allie Grace Garnett is a professional researcher and freelance writer with a background in finance and entrepreneurship. A serial entrepreneur who has established numerous businesses, Ms. Garnett previously was a founding Principal of Nexos Resource Partners (NRP), an energy project finance firm in New York. Prior to co-founding NRP, Ms. Garnett provided financial advisory and fund raising services to institutional-scale energy funds with Sustainable Development Capital. Ms. Garnett served as the Vice President of Marketing and Strategic Partnerships for the start-up Rentricity, and additionally founded a nonprofit organization (YAVA) that encourages volunteerism among college students. Ms. Garnett holds a Master of Business Administration degree from Harvard Business School and a Bachelor of Science in Civil Engineering degree from Northeastern University.