Disruption, 'Dematurity' and Cooperative Commercialization
Disruption in an industry often comes from the gradually accumulated effects of many interacting forces rather than a sudden change, business analyst John Sviokla writes, and what happens to industries impacted by this multifaceted dynamic is a phenomenon he calls "dematurity."
"You can think of dematurity as a crescendo of mini disruptions that add up to great effect," Sviokla writes in Strategy+Business. "It will hit most industries sooner or later; it has struck sectors as varied as soft ware development, entertainment and defense contracting. It's happening right now in the U.S. in healthcare and electric power generation." And results can be surprising.
The term, coined in the early 1990s by former Harvard Business School professors William Abernathy and Kim Clark, describes what happens when many small companies rapidly adopt multiple innovations that can rejuvenate practices in an old industry. Sviokla explains the professors were thinking of the U.S. auto industry, which was profoundly challenged by Japanese competition, the quality movement and lean management. But instead of collapsing, the big three Detroit automakers adopted the tools and techniques of their competition and aimed for better quality and customer satisfaction.
Sometimes disruption actually helps market leaders. Wharton Management Professor David Hsu, MIT Professor Matthew Marx, and University of Toronto Professor Joshua Gans studied the speech recognition industry and found start-ups that introduce disruptive technologies with long term potential are more likely to end up licensing their innovations to established businesses, or agreeing to be acquired, than they are to become rivals. They say that's because start-ups are eager to prove the value of their innovation, and once they do, they often form alliances with the established businesses or merge with them. These authors call that a cooperative commercialization strategy that sometimes has the effect of preserving the status quo. Read their paper here.
Sviokla says while dematurity can make industries young again, it can also threaten individual industries if leaders haven't seen it coming in time to prepare. He cites five "often overlooked but genuinely prescient" signals of change:
New customer habits: Mobile phones used only for voice communication in the 1990s didn't dramatically change people's habits. When people began to use phones for text messages, reading magazines and books, listening to music, and playing games, habits changed. They began taking pictures, shopping online and using multiple apps so business and pricing models changed in a large group of industries that once operated independently. The same thing happened in IT when access to services by high speed cloud connections began to replace web based software.
New Production Technologies: A recent survey showed more than two thirds of 100 manufacturers report some use of 3D printing, a burgeoning technology that will have major impact in many industries in the manufacture of goods, supply chains, product development, and transportation.
New Lateral Competition: The emergence of healthcare outlets in bog box stores and retail clinics is creating competition for primary care providers and hospital emergency rooms, which will have to adapt. Old and new businesses in healthcare are trying to keep people out of doctors' offices with services to promote exercise, control weight, manage disease and offer advice.
New Regulations: When regulations appear to pave the way for self-driving cars, major dematurity can be expected in public mass transit and private transportation-related industries.
New Means of Distribution: Digital infrastructure has already dematured media and entertainment. Regulations allowing expanded commercial use of unarmed aerial vehicles-drones-would have major impact in fields such as law enforcement, insurance, and delivery of emergency supplies to remote areas. Amazon plans to use drones to deliver merchandize, and some analysts predict drones are the transportation of the future.
Sviokla is co-author of The Billionaire Effect: What Extreme Producers Can Teach Us about Breakthrough Value. He is a principal and advisory innovation leader with PwC. Read his Strategy +Business article here and the David Hsu article here.
PlexusCalls
Friday, August 15, 2014- 1-2 PM ET
Deconstructing Disruption
Guests: Peter Jones, David Hurst and John Kenagy
The concept of disruptive innovation was developed by Harvard business scholar Clayton Christensen, and the term has become ubiquitous. Harvard historian Jill Lepore wrote in a recent New Yorker article that the theory is founded on apocalyptic fear of financial collapse, global devastation and shaky evidence, and debate erupted in scholarly and business circles. Does innovation need disruption, and what exactly is disruption? These guests have perspectives gained through their own scholarship and organizational experience. Christensen invited John Kenagy to be a Visiting Scholar at Harvard Business School to help develop a concept of disruptive innovation in healthcare. He admires Christensen's insights but has shifted his own focus to adaptation. Peter Jones and David Hurst have studied and written about disruption and innovation in healthcare and other fields.
Healthcare PlexusCalls
Wednesday, August 20, 2014- 1-2 PM ET
Project ECHO: Building Capacity for Specialized Care in Remote Places
Guests: Erika Harding
Ten years ago, Dr. Sanjeev Arora, a hepatologist at the University of New Mexico, became concerned because patients with chronic hepatitis C were dying, despite the availability of drugs that could cure 45-70 percent of patients. Waiting times of six to eight months to get an appointment were common; the long drive to reach specialists and the need for many treatments discouraged many from even trying to get help. The patients who did reach the clinic might be beyond the point where treatment would help. He wanted to expand his capacity, to share his specialized knowledge with primary care physicians in remote areas, so patients could be treated close to home.
This was the start of Project ECHO, which today assists providers in more than a thousand clinics with 26 specialties. Donald Berwick, former administrator of the Centers for Medicare and Medicaid Services and former president and CEO of the Institute for Healthcare Improvement, observed that Project ECHO's model represents a fundamental design shift-"from moving the patient to moving the knowledge"-to build a health care system capable of meeting today's soaring demands for care. "They've shown that with proper support the primary care workforce, including nurses, not just doctors, can function to very high levels of precision with highly complex care." Erika Harding, Director of Replication Initiatives for Project ECHO, will join the call to share the story of this successful idea, and where it is being used today.
PlexusCalls
Friday, August 22, 2014- 1-2 PM ET
Quality Childhood Programs Boost Adult Health
Guests: James Heckman, Gabriella Conti and Ruth Perry
A growing body of evidence suggests early childhood adversity echoes throughout lifetimes in terms of diminished educational and economic outcomes. Researchers have also found that can be changed-and that high quality early interventions impact adult health in surprising ways. Data from the North Carolina Abecedarian Project started in 1972 shows adults who received educational, medical and nutritional support from infancy through age 5 have less high blood pressure, less obesity, and lower incidence of chronic diseases than peers who were not part of the intervention. James Heckman, a Nobel laureate in economics and University of Chicago professor, led the data analysis. He and health economist Gabriella Conti are coauthors of Science Magazine article detailing results of the study. Ruth Perry leads the Trenton Health Team in Trenton, NJ.
