This article is an excerpt from the Shortform book guide to "Lead from the Future" by Mark W. Johnson and Josh Suskewicz. Shortform has the world's best summaries and analyses of books you should be reading.
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What separates breakthrough innovation from core innovation? What difference does it make for your business?
The authors of Lead From the Future say you must change your focus from short-term concerns and time horizons to the future you want to see at least five or 10 years out. Adopting such a visionary approach for your organization requires you to shift how you think about and execute innovation.
Keep reading to learn why breakthrough innovation must be part of the equation.
Breakthrough Innovation
According to the authors, breakthrough innovation—innovation that creates new markets rather than just improving or updating current offerings—is at the heart of long-term growth and relevance. Even if your company is doing well currently, its growth will likely stagnate without effective breakthrough innovation strategies, and your company will fail in the long term.
The authors explain that established companies often overlook the importance of breakthrough innovation because they believe they can survive in the long term by focusing only on improving their company’s core offerings—their fundamental activities, resources, capabilities, and so on. These types of incremental core innovations are necessary to improve efficiency within your company and enhance your current product performance, but they’re not enough on their own to ensure growth and longevity.
| Different Industries Require Different Levels of Innovation Most business experts agree that strong innovation capabilities are essential for achieving success. However, some argue that being a top innovator doesn’t guarantee long-term success for all companies. In Great by Choice, Jim Collins and Morten T. Hansen present research indicating that, of the seven companies studied, only three that outperform their competitors globally in their industries during periods of upheaval could be classified as more innovative than their competitors. According to their findings, the key to success is to innovate enough to meet the innovation threshold specific to your industry, as different industries have varying margins for successful disruptive innovation. Innovating more than what your industry typically needs to stay competitive is unnecessary and a waste of resources. High innovation threshold industries include tech—computers, software, and biotech, for example. Medium innovation threshold industries include medical technology, whose growth isn’t as fast-paced, and consumer-driven tech. And low innovation threshold industries include transportation sectors like airlines and service sectors like insurance that don’t require frequent updates to their structures and products. |
Additionally, many executives fail to prioritize breakthrough innovation because they often overestimate the risks of investing in such innovations. As a result, companies tend to fund projects that only improve efficiency and current offerings. But the authors argue that you can manage these risks and, importantly, that the cost of not taking innovation risks is much higher than sticking to safer incremental innovations. The visionary planning mindset broadens your perspective beyond the familiar and prioritizes strategies for breakthrough innovation initiatives, despite the perception of the higher risks it carries.
| The Risks of Investing in Disruptive Innovation Johnson and Suskewicz don’t elaborate on the risks established companies take when they pursue disruptive innovation. In The Innovator’s Dilemma, Clayton Christensen addresses these risks. He explains that pursuing disruptive innovation creates risk. Here’s why: It requires companies to develop new capabilities and expertise. This can be challenging and may require significant investments in training and development. It requires significant investments of resources, which can be difficult for established companies to justify to their shareholders or investors. It can initially appeal to niche or low-end markets, which, if they don’t grow or expand, can be less profitable than established markets. |
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Here's what you'll find in our full Lead from the Future summary:
- Why it's important to anticipate future change rather than reacting to it
- A three-stage framework for staying ahead of the competition
- How to understand and adopt the visionary planning process
