GET IN TOUCH
- Please wait...
What kills a company? Is it a new product by a competing company or an industry-wide disruption?
Let’s say you run a plastic company manufacturing water bottles. Typically, you watch for two key threats: a competitor undercutting your price or a competitor launching a superior design that captures consumer interest. If you’ve been in the industry for a while, you’re likely entrenched enough to fend off both threats to some extent.
However, a third and more dangerous scenario exists—a disruptive market entrant that renders your product obsolete. Imagine a company introducing a biodegradable paper water bottle that decomposes naturally while maintaining the effectiveness of a container. This isn’t just another product; it’s a redefinition of what a water bottle can be and a transformation of the entire value chain. Investors would back this innovation, while others might bet against your company’s survival. Over time, you could become obsolete.
Consider taxi companies. Uber didn’t introduce a better taxi—it introduced a better system, eliminating inefficiencies in the traditional model. The same applies to the iPhone, Netflix, and Nikon. True industry shifts happen not through incremental product innovation but through system innovation.
From a Bangladeshi perspective, what major innovations have emerged in the past few decades? Halal Saban (soap) comes to mind. However, it was a product innovation, not a system innovation. While it captured consumer interest, it didn’t fundamentally change the industry. In contrast, companies can survive product innovation, but system innovation can render them obsolete.
To be truly innovative, you need three things:
A. System Innovation
B. Communication
C. Corporate Management
System innovation changes how a product’s utility or value is delivered to the customer, emphasizing convenience. In contrast, product innovation tweaks or enhances existing features.
Think of Uber—you still get a taxi service, but the process of hailing, paying, and tracking is completely different. A traditional taxi company might try to innovate by lowering prices or adding new features, but Uber transformed how the service itself is delivered. The same applies to Netflix—it didn’t change entertainment but revolutionized how we access it.
Even a revolutionary product can fail without clear, compelling, consistent, and constant (in that order) communication. A company must effectively communicate its innovation to investors, employees, and customers—again, in that order.
Consider Steve Jobs unveiling the Macintosh—his presentation made the innovation instantly recognizable. Strong communication bridges the gap between innovation and market adoption.
Even with system innovation and strong communication, poor internal management can still lead to failure. If you lack financial runway, your company will fail. If employees aren’t motivated by your vision, you will fail. If you can’t scale sustainably, you will fail.
A key warning—system innovation isn’t always about efficiency. Integrating robots into an assembly line or AI into operations reduces costs and increases efficiency, but that’s not system innovation.
The process starts with a simple question: What new product could I create that would immediately kill my existing ones?
Let’s apply this to a biscuit company. How should you innovate an aging product line?
Instead, think fundamentally: What is the function of a biscuit? At its core, it’s a vehicle for delivering flavors in a wheat-based snack format. Can you offer the same value in a different, more convenient way? If you can, voilà—you just disrupted the centuries-old biscuit industry.
Our experts can help you solve your unique challenges
Stay up-to-date with our Thought Leadership and Insights
