We all think we know what ‘Disruptive Innovation’ is, but do we actually do?
It is very common that we confuse Disruptive and Breakthrough innovations. To prevent this from happening we’ll clarify their meanings and differences. In order to do that, we first have to define the 3 horizons within the Market-Technology Matrix:
For a stablished brand, Horizon 3 normally gives 5% of their total income; it includes the new visionary categories for core markets and is where the exploration into new markets happens. Horizon 2 usually produces 25% of total income and is known as the ‘cold market’, the place for adjacent growth. Finally, Horizon 1 provides 70% of the total income and is composed of existing markets that need to be sustained.
As we can see, Horizon 1 is pretty important, therefore, we need to keep its customers happy with Sustaining Innovation, but that is not enough because they could get bored or other brands may gain them with newer technologies. That is why Horizons 2 and 3 are also very important. But what type of innovations are needed to satisfy these customers?
Horizon 2 is reached with Breakthrough Innovation because there is already an EXISTING MARKET looking for new alternatives to do what they already do in a different way.
On the other hand, Horizon 3 contains NON EXISTING MARKETS, and that is where Disruptive Innovation comes in place by presenting new realities and creating new habits. It starts with a new vision of the world.
It is as simple as that.
