HC3031 - Disruptive Innovation: Key Drivers in Global Business Trends

This report examines the key drivers of disruptive innovation in the global business environment, highlighting the importance of adapting to market changes for long-term stability. It discusses sustainability, understanding audience needs, fostering a culture of innovation, stakeholder engagement, digital transformation, global competition, and purpose as crucial drivers. The report uses examples like Blockbuster and Netflix to illustrate how disruptive innovation can impact businesses. It emphasizes that successful organizations view business through the lens of customers and proactively respond to change by transforming their business models. The report concludes that disruptive innovation, driven by these factors, leads to significant benefits and competitive advantages for firms, while also cautioning against the misapplication and misunderstanding of its core concepts.

Running Head: BUSINESS ENVIRONMENT 0
KEY DRIVERS OF DISRUPTIVE INNOVATION

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Table of Contents
Introduction................................................................................................................................2
Key drivers.................................................................................................................................2
Conclusion..................................................................................................................................6
References..................................................................................................................................7

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Introduction
With change in business market environment, long-term stability can only be ensured if an
organisation is going with constant market disruptions within their business models. In recent
years, the progression in the global markets has reinforced organizations to reconfigure their
strategies so that they can compete on global platform effectively (Sosna et al, 2010). It helps
them to achieve competitive advantage at a global scale and Disruptive innovation is
something that alters your product lines, services, or business model in fundamental ways.
Disruptive innovation can be described as a procedure by which a product or service on an
initial level takes root in simple applications at the bottom of a market – usually by being
more accessible and less expensive – and then persistently moves upmarket, ultimately
shifting well-known rivals. With the case of Blockbuster, it can be understood how disruptive
innovation can make or break a business. In 2000, Blockbuster was a booming enterprise;
however, file for bankruptcy 10 years later, and Netflix, a new organisation in 2000, grew as
per market capitalization of $152.7 billion Company (Bloom, 2018) it is today? The response
is simple – Blockbuster did not adapt to the changing world that was seeking innovation in
not only the products and services but also in the business models. Oddly, the partnership
proposal of Netflix is also ignored by Blockbuster.
Hence, in the disruption economy, the most successful organisation will be those who view
the business through the lens of customers. With adoption of technology, various businesses
are disrupting the market and reorganizing traditional industries. Hence, disruptive innovation
can also be understood with digital disruption. It has changed established ways of interacting
and doing business. Disruption can blindside entire industries (Cohen and Kietzmann, 2014).
Acknowledging the drivers of disruptive innovation will help the business in future-proof
their offerings.
Key drivers
Considering the drivers of disruptive innovation, sustainability is known to be one of the
significant drivers as today businesses are competing on global scale with the ever-changing
demand, resource scarcity and change in social environment (Govindarajan and Ramamurti,

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2011). Today, sustainability is seen as a new way to innovate and maintain or gain
competitive advantage. Many organizations today adding this driver to the bottom line of
their business model. Hence, it can also be said that if company are looking for disruptive
innovation, it must change their existing business model or creating a new one.
Sustainability based disruptive innovation can be based on identifying new applications for
existing product and services, modifying current business process, building new services and
product, using or building out new technologies and change management technique. These
are also linked with social and environmental benefits. Hence, sustainability focused
disruptive innovation does not have to mean an overhaul of the whole enterprise (Hwang and
Christensen, 2008). Small ideas may cause a big impact. In addition, sustainability can also
lead to interesting next-practice platforms. One is emerging at the intersection of the internet
using digital technology to distribute all sorts of sources as per the demand of the consumer.
Disruption is foreseeable and no enterprise is immune. Embracing disruption – both
managing it and anticipating it – is crucial for business to thrive during the change. One of
the key drivers of disruptive innovation is also linked with truly understanding the needs of
the audience (Keller and Fay, 2012). Considering agility to forward-thinking industry trends,
big organizations can gain knowledge from newcomers and benefit their teams innovate on
consumer behalf – key to booming during change. Hence, it not just about innovating and
developing products better, it is about foreseeing customer needs in an effective way. In
opposed to traditional competitors, this type of disruption frequently arose from new players.
This can be better understand with the help of example i.e. the company that delivers most
taxi rides does not possess any taxi, the enterprise that allows renting of various rooms does
not own any room, and the company that dispenses the most media does not generate any
content. Of course, these companies are Uber, Airbnb and Facebook. Hence, it can be said
that they got there not by being best in their field but by providing a completely new one.
Therefore, understanding key needs of the customers is also a driver of disruptive innovation
as it helps the organisation to match with trends in order to offer latest product or services to
the consumer.
Encouraging a culture of innovation is another key driver of disruptive innovation.
Innovation is the key to success of any business and matching it with organisation goals and
resources is a complicated process (Omachonu and Einspruch, 2010). It not only just boost
organisation creative thinking but also help the firm to attain competitive edge in the

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industry. It was also said that not every innovation causes disruption but nearly all disruptions
are caused by innovations and while cycle is repeating, the innovations are getting more and
more disruptive. Nowadays, innovation is leading by various revolutions in relation with
extensive development in quantum computing and AI technologies and this is more true and
significant than ever (Prisecaru, 2016). Moreover, it can come from inside the company by
adopting lean startup methods, fostering innovation driving behaviour and building
intrapreneurship. To make this towards disruptive, corporations are required to re-think, and
then re-invent their corporate innovation model in relation to three horizons i.e. corporate
culture, organisational structure and employee attitude.
In any organisation, stakeholder engagement and behaviour also cause for disruptive
innovation and it is considered one of the key driver of disruptive innovation. Strengthening
the core by deploying exponential technology platforms and leveraging external environment
aspects will lead to satisfaction of stakeholders who demand short-term results and avoid
surplus attention to the edge. Hence, it is significant for the organisation to work within the
core edge activities focusing on disruptive innovation so as to satisfy stakeholders who seek
for short or long term results by buying time for transformation. All this ultimately result in
stakeholder alignment and R&D speed in general and makes organisation to truly become an
innovation shop (Wu and Pagell, 2011). It may be challenging to organisation to move up
with the interest of stakeholders and thus cause a barrier to the disruptive innovation.
The next key drive leads to disruptive innovation is the digital transformation at a global
level. It marks radical thinking of how an enterprise uses people processes and technology to
essentially alter business performance. Organizations often embark on digital transformation
to counter the potential for disruption from startups and incumbents. The digital
transformation is also aligned with the shifting consumer expectations where the
organizations are transforming a current model while reaching a consensus on the best path to
pursue. With regards to this, digital transformation demands courage and remarkable vision
and it helps with insight to tap into emerging trends to revolutionize their sector, changing the
perception of the society. To manage the impact of digital disruption, the business structure
needs to be aligned to the technological shift that digital transformation brings (Fitzgerald et
al, 2014). It implies transforming business culture at the same pace as driving technology
change. It will ensure their digital transformation strategy includes all aspects of the business
and is suited to the needs of the enterprise. Infrastructure improvements are typically

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required, as part of digital transformation initiatives with leveraging emerging technologies
must develop the technologies into a cohesive platform.
Global competition in the business environment also pressurizes organisation towards
disruptive innovation. To stay competitive in today’s market, companies need to think like a
disruptor and sustain their business against potential competitors. This also enables the role of
leadership within an organisation necessary for transforming their core business. Some
organisation also prefer minimizing costs with adoption of lean production techniques
leveraging the competencies of the employees. Companies are also progressively employing
open innovation, a method designed to reduce the cost of continual innovation and it will also
provide solutions to a particular challenge (Massa and Tucci, 2013). These disruptive
innovations can deliver significant benefits to consumers and competition. Hence, innovation
can help in defining the global competitive advantage. As long an organisation pursuing to
constantly improve its product or services, it is going to be competitive, however, by the
dominant player in the market.
Purpose is the next key driver while fostering an innovative culture and disruptive innovation.
Disruptive innovation is value driven by the purpose. Today business has new service-driven
business models connect things with people and process (Naranjo Valencia et al, 2010). A
corporation can do one of three things i.e. keep up with innovation trends, become a late
adopter of innovation, emerge as a trendsetter with co-innovating to the trusted partners.
Many businesses often is done mistake with the technology adoption, however, a better
approach is to collaborate with experts through company boundaries and enable them to help
with identifying the right technology and applications in association with business challenges.
Other than this, the businesses can also focus on co-innovation with the help of strategic
partnerships in association with trusted technology experts.

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Conclusion
Hence, with these key drivers, disruptive innovation invades the marker, industry, force
change, and create new sectors of the industry and in turn, brings out greatest benefit for the
firm. A disruption innovation is not a breakthrough innovation that makes good product a lot
better. These key drivers led the organisation to disrupt the market and satisfy all their
microenvironmental factors such as customers, employees, stakeholders and management. In
addition, disruptive innovation also led by transformation and proactive response of the
management with adaption of the business model to the changing world. The disruptive
innovation extends to the level of enabling an innovative business model with using of IT –
allow disruptive innovation in the process of business and models that can lead to overturning
the set players in the marketplace.
However, disruptive innovation drivers sometimes become victim of its own success. Despite
broad dissemination, the theory’s core concepts have been widely misunderstood and its
basic tenets frequently misapplied. In addition, the theory is sometimes criticized for
shortcomings that have already been addressed. However, if addressed properly, it may lead
the organisation to greater sustainability and growth.

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References
Bloom, D. (2018) Is Netflix Really Worth More Than Disney Or Comcast? [ONLINE]
Available from: https://www.forbes.com/sites/dbloom/2018/05/26/netflix-disney-comcast-
market-capitalization-valuation/#301410571561 [Accessed 31/05/2019].
Cohen, B. and Kietzmann, J. (2014) Ride on! Mobility business models for the sharing
economy. Organization & Environment, 27(3), pp.279-296.
Fitzgerald, M., Kruschwitz, N., Bonnet, D. and Welch, M. (2014) Embracing digital
technology: A new strategic imperative. MIT sloan management review, 55(2), p.1.
Govindarajan, V. and Ramamurti, R. (2011) Reverse innovation, emerging markets, and
global strategy. Global Strategy Journal, 1(3‐4), pp.191-205.
Hwang, J. and Christensen, C.M. (2008) Disruptive innovation in health care delivery: a
framework for business-model innovation. Health Affairs, 27(5), pp.1329-1335.
Keller, E. and Fay, B. (2012) Word-of-mouth advocacy: A new key to advertising
effectiveness. Journal of Advertising Research, 52(4),
Massa, L. and Tucci, C.L. (2013) Business model innovation. The Oxford handbook of
innovation management, 20(18), pp.420-441.
Naranjo Valencia, J.C., Sanz Valle, R. and Jiménez Jiménez, D. (2010) Organizational
culture as determinant of product innovation. European Journal of Innovation
Management, 13(4), pp.466-480.
Omachonu, V.K. and Einspruch, N.G. (2010) Innovation in healthcare delivery systems: a
conceptual framework. The Innovation Journal: The Public Sector Innovation Journal, 15(1),
pp.1-20.
Prisecaru, P. (2016) Challenges of the fourth industrial revolution. Knowledge Horizons.
Economics, 8(1), p.57.
Sosna, M., Trevinyo-Rodríguez, R.N. and Velamuri, S.R. (2010) Business model innovation
through trial-and-error learning: The Naturhouse case. Long range planning, 43(2-3), pp.383-
407.

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Wu, Z. and Pagell, M. (2011) Balancing priorities: Decision-making in sustainable supply
chain management. Journal of operations management, 29(6), pp.577-590.