Working at the nexus of enterprise technology and procurement strategy, we see the words disruption and innovation a lot here at Spend Matters. So often, in fact, that every time I come across either of these words, whether in a press release or marketing copy, the letters begin to blur together and a strange ringing noise fills my ears.
Maybe that’s an exaggeration. But I do know that the increased appearance of disruption and innovation in my daily reading has caused me to question whether some writers pick those words for their specific definitions or just to liven up a sentence with an adjective that surely means only good things.
That’s really the problem with disruption, innovation, disruptive innovation and all of the other words that capture our hearts and minds with their viral popularity. (Looking at you, “post-truth.”) At some point, it becomes difficult to remember where these words even came from and why we began using them the way we do — to say nothing of what they actually mean.
Disruption is perhaps one of the best examples of this. Entire degree programs and events are dedicated to disruption, and Silicon Valley has claimed disruption its raison d’être. Yet scant time is spent discussing the validity of disruption dogma, let alone the historical origins of the religion “innovators” preach.
This isn’t to say we should abandon disruption is favor of an alternative. (No, we don’t need to disrupt disruption. You stop that right now.) Rather, getting a firm definition of the word and understanding its history is a critical step to improving any business initiative for which disruption is a proposed aid, from creating new technologies for procurement processes to designing supply management strategies.
The Innovator’s Origins
Just how the word “disruption” become a popular phenomenon can be traced back to a book readers of Spend Matters likely know well: “The Innovator’s Dilemma,” by Harvard Business School Professor Clayton Christensen.
At its core, the text is a study in why businesses fail. One of the main causes of business failure, Christensen writes, is that companies focus on incremental improvements to their products — “sustaining innovations,” in Christensen’s words — and miss out on untapped customer markets served by cheaper, lower-quality products that eventually consume the entire industry.
Disruptive innovation is not a law but a theory. Christensen’s work seeks to, in many ways, offer a theory of change for businesses and markets. It helps us explain why businesses failed in the past and hopes to provide a framework for assessing the likelihood that a product or company will fall to market forces. What makes the word unpalatable for an editor like me is when it is lifted — and then abused — outside of this more measured, academic context.
Disruption in the hands of marketers has become less a theory of change and more a theory of everything. It has attained moral stature among its most ardent adherents, to the point that anything that the word innovation can be loosely associated with is automatically a societal good.
Consider, for example, how the connotation of “innovation” shifts significantly based on its historical context. As Jill Lepore explains in her examination of disruptive innovation for the New Yorker, writers in the 19th century invoked innovation for negative purposes — to signify novelty, without purpose or end. Noah Webster warned in his dictionary, in 1828, “It is often dangerous to innovate on the customs of a nation.”
The rebranding of innovation started in 1939 with the economist Joseph Schumpeter, whose theory of “creative destruction” put forth an idea that pre-empted Christensen’s: that technological invention is the cause of both cyclical instability and economic growth. As the idea gained popularity with techno-utopians, innovation became in the 20th century not a danger but guiding light, one that until recently faced little critical inquiry.
The Innovator’s Critic
Disruptive innovation has come under greater scrutiny over the last couple of years. Lepore, cited above, called it “a theory of history founded on a profound anxiety about financial collapse, an apocalyptic fear of global devastation, and shaky evidence.” She questions Christensen’s method of using handpicked case studies to illustrate his points, and argues that he misreads the historical performances of companies cited, opting instead for a myopic focus on facts that best suit his theory.
And Lepore is not alone. In 2015, Andrew King, a professor at Dartmouth’s Tuck School of Business, and Baljir Baatartogtokh, a graduate student at the University of British Columbia, put the theory of disruptive innovation through their own stress tests and found it lacking, concluding the idea had little predictive power and cautioning managers not to rely on such a “simple” theory.
Christensen has, as one would expect, not reacted gleefully to having the validity of his life’s work called into question. One the one hand, he agrees with Lepore that the almost random use of the word disruption needs to be reined in, and that doing so would bring discipline and understanding to his theory. On the other, Christensen says every criticism of “The Innovator’s Dilemma” Lepore made has been addressed in his subsequent writing, and that she merely needed to read more of his scholarship to fully understand the theory.
How We View Disruption
Making some concessions, Christensen has made efforts to better clarify his exact definition of disruption and update his theory for the modern world. (Uber, for example, doesn’t fit with proper disruption theory, he says.)
So how do we view disruption here at Spend Matters? Based on our use of the term in our first research report of 2017, The Impact of Disruptive Technologies and Solutions on Contingent Workforce and Services Procurement, we define disruption as “change driven by technology — specifically, technology that transforms and/or displaces solutions, processes, etc. across a supply chain or parts of it.
Put another way, “while disruptive technologies enable innovative, disruptive solutions (built on these innovations), they also give rise to new business and process models which drive significant economic and service benefits.”
For procurement, this should give practitioners a solid working definition with which they can critically evaluate new technologies and solution offerings. The operating word here is “critically.” Disruptive innovation is neither a perfect theory of everything for business nor a relic of the 90’s and 2000’s that should be discarded in favor of something “new.” It is useful theory that is still being updated with new evidence and data.
Evaluate disruption's invocation critically and beware of the hype. The narrative is, admittedly, seductive. But my advice as your friendly neighborhood editor is this: Look up the definitions and history of popular words. What you find may surprise you.