Thinking About and Dealing with Radical & Disruptive Innovation
Let’s talk about innovation. We often think that radical or disruptive innovation in an industry or sector leads to the inevitable death of the currently dominating players. We point to examples how Apple and Google have disrupted the smartphone market, bankrupting previous dominant companies like Nokia or BlackBerry. But does radical or disruptive innovation really lead to the inevitable death of the incumbents, while a new generation of players take over?
Assumptions & Definitions
Before we dive into it, some assumptions and definitions are in order.
For this article, let’s define “innovation” as: “The successful exploitation of new ideas, tools and processes to increase efficiency and effectiveness, as well as to create new opportunities for individuals and organizations.”
The core assumption is that innovation is not distributed equally. That means that everybody starts their innovation journey from different maturity levels — not only as an organization, but also within segments of that organization. Some parts of an organization might be already very innovative, others might not be. There are manufacturers that use cutting edge automated and connected production lines while their back office still runs Windows 7. The assumption also implies that one needs to be mindful about how (parts of) organizations feel about and manage innovation, meaning innovation needs to be looked at from the individual viewpoint of that entity.
With that said, for this article, let’s define different types of innovation from the perspective of a business as follows:
- Incremental innovation: A direct improvement of something the organization is already doing. This innovation can usually be achieved from within the organization with its current capabilities.
- Radical innovation: A major improvement of something the organization is already doing, introducing new capabilities into the organization as a result. This can usually be achieved from within the organization by upskilling, in some cases with outside help.
- Disruptive innovation: A functional, significantly better substitute, based on completely new, non-transferable abilities. This usually introduces massive change in the organization.
All on the same page? Ok, now let’s look at an example.
Case Study: The Triumph Adler 1040 Series
The protagonist of this story is the German company Triumph-Adler (TA), a leading manufacturer of typewriters in the 1970s. Founded in 1896 as a bicycle manufacturer, it had also started manufacturing motorcycles and typewriters. After World War 2, they focused on the typewriter business, quickly becoming one of the market leaders in mechanical typewriters, innovating iteratively by offering smaller and lighter models.
The IBM Selectric, released in 1961, was a radical innovation in typewriters. Instead of the “basket” with individual spokes swinging up to strike the character through a coloured ribbon onto the horizontally moving paper, it featured a typeball and ribbon mechanism that itself moved across the paper. This made typewriters lighter, compact and overall more durable. The principle of the typewriter was still the same and nothing really changed for typists, but they did require new knowledge and tools in design and production. Triumph Adler was able to radically innovate and released their first electric typewriters by the mid 1960s.
In the 1970s, it was already thinkable that the emerging “Computer” might eventually replace traditional typewriters. But they also represented a disruptive innovation: Typewriter manufacturers had no idea how to design or manufacture computers, let alone write software for them. Typists also needed to learn completely new skillsets to effectively do the same as before and utilize the new capabilities of PCs. Both manufacturers and users needed to learn new paradigms to do the same as before.
Instead of quietly fading away, Triumph Adler decided to face the challenge head on by transforming one big disruptive innovation into multiple radical ones.
In the late 1970s, Triumph Adler created an accounting solution consisting of a large computing unit that connected to an electronic typewriter and calculator: The TA 10.
In essence, they compartmentalized. TA added new capabilities by learning about computer manufacturing and software, without yet fully integrating it into their core products. Instead they used existing products to extend the new capabilities.
Building on this, they created a stop gap solution to allow themselves and typists an easier transition between both worlds. The TA SE was a family of “highly intelligent text systems” introduced in 1982. As a modular system, the devices in the series all looked very similar, sharing many of their components and capabilities.
While most members of the SE family were manufactured as all-in-one typewriters, the SE 1040 series tried something new. Instead of housing the keyboard and the printing components in one chassis, TA separated both. The keyboard was housed within its own case that also contained a display capable of showing a row of 40 characters. Printing and paper handling was managed by a separate daisy wheel printer.
Both units connected via a parallel port, using standardized interfaces. This meant that some versions of the keyboard could also be used as a stand-alone teletypewriter, while the printer could also be used in combination with a PC. The printer unit was also sold separately as “TRD 170” daisy wheel printer for office computers.
The keyboard unit was controlled by a 8048/49 microcontroller and featured 8kb of memory. It offered 10 memory slots, each capable of holding up to 730 characters, or about 10 lines of text. Other models featured 16kb and doubled the number of memory slots, as well as the option to use external storage. Typists could enter and edit text into the keyboard memory before sending it to print on the printer unit. Memory slots could also be used for text templates and form letters.
Triumph-Adler sold a separate monitor, to which many of the SE devices could be connected. The Adler ScreenTyper extended the 1040’s display, organizing single rows into pages. The interface was fully controlled by the keyboard, giving users “the benefit of genuine word processing with ease of operation of modern electronic typewriters.”
At this point it becomes clear that the TA SE series are computers — just very simple ones that run no real operating system but a hardwired word processor, utilizing familiar typewriter keys and metaphors. They allowed Triumph-Adler to learn and perfect their capabilities in producing PCs, while typists could already enjoy the benefits of digital word processing without learning a new interface paradigm. This made the SE system very popular, hence the relatively cheap price for used 1040 variants today.
This was then followed by their own line of personal computers, the Alphatronic line, a direct continuation of the 1040 learnings:
Unfortunately, their PC line didn’t turn out so well. In 1986, Triumph-Adler was acquired by Olivetti, a competitor of TA based in Italy. After the acquisition, production and development of TA products was largely halted and several German manufacturing facilities were closed and sold off.
Neither Radical nor Disruptive Innovation Is Lethal
In their 80 years of doing business, Triumph Adler managed to deal with multiple radical and disruptive changes while keeping their market dominance.
Going back to the original example of Apple disrupting away Nokia, Apple itself is an excellent example of constant radical and sometimes disruptive innovation in the computing industry, for example transforming from an OEM using Motorola and Intel CPUs to producing their own and introducing radical innovations in chip design and integration in the process.
Also, Nokia is not dead just because it mismanaged and had to sell their smartphone business. In fact, the company originally started out as a pulp mill, then going into electricity generation, making rubber boots and tires, to then go into electronics, radios and eventually mobile radio telephones. Pivoting from smartphones to today being a leading multinational data networking and telecommunications equipment providers is just another Tuesday in the history of the company.
So, radical and disruptive innovation not always displaces the incumbents and if it does, the displaced companies can pivot and survive. The real skill is for an organization to understand change as it happens, when to engage with it, where to engage with it, or when to pivot entirely.