disruptive decision making

You are here


Disruptive innovation changes the shape of markets and industries. There are three things that can be done to make better decisions in areas susceptible to this type of innovation . (Christensen, Clayton, and the Innosight Team, Innovators' Insights #97: The Dangers of Data, Strategy & Innovation, September 18, 2007).

First, is to let patterns inform decisions. A simple pattern connects these seemingly disparate developments:

  • There is an important problem that can't be adequately solved by current solutions
  • An innovator develops a different way to solve the problem that focuses on simplicity, accessibility, affordability, or customizability
  • The innovator adopts an approach that powerful competitors would find unattractive, uninteresting, or difficult to mimic in the near term
  • The solutions is commercialized with a business model that creatively maximizes revenue potential while minimizing fixed costs

Second, it is critical to remember the importance of focusing on assumptions, not answers. See if there are analogs or benchmarks that can provide insight into whether there are reasons to believe that major assumptions might bear some kind of semblance to reality. Always be on the lookout for simple ways to turn assumptions into knowledge.

Third, companies can turn to emerging tools like prediction markets, where people buy and sell virtual shares based on their belief about the likelihood of certain events. Prediction markets take advantage of the ""wisdom of crowds"" phenomena noted by James Surowiecki: The collective almost always does a better job at answering questions than any one individual.

Prediction markets such as the University of Iowa's Iowa Electronic Market have proven to provide accurate forecasts of presidential elections and Oscar nominations.