As British Airways must "think outside the box" to fully understand the operations of low-cost airlines (by creating G),
In the early stages, discontinuous innovation appears in the form of subtle signals. Buyers must be in the right place at the right time to discover these subtle signals in the supply market. Various market forces may drive the creation of innovation, but to jointly develop potential discontinuous innovations, buyers and sellers need to cooperate in some form (this cooperation is not necessarily friendly; in some cases, both parties cooperate to achieve their own goals).
Companies often overlook the potential role that procurement personnel and procurement departments can play together in the innovation process. Product and service innovation is usually seen as the responsibility of designers or engineers, while process innovation is considered the work of consulting advisors or process reform departments. However, it is precisely the procurement department that interacts with innovative suppliers. As a procurement person, what you need to do is convince the supplier to share its innovative ideas with you.
Now, however, we have discovered a completely new type of innovation. This innovation can cause the collapse of deeply rooted industrial empires and can also force successful companies to bow down before it. It is a powerful disruptive innovation, and it is also quite common. It is called "discontinuous innovation." Initially, discontinuous innovation is often ignored as a subtle signal, but it has the potential to evolve into a fatal threat or a powerful weapon, and it can occur in any industry. In the 1980s, this kind of innovation caused leading companies in the computer disk drive industry to repeatedly lose their top positions. Christensen (Clayton Christensen) discusses this in his book *The Innovator’s Dilemma*.
Discontinuous innovation refers to the innovation that occurs when market entrants or existing companies break conventions and change the rules of the game. While managing discontinuous innovations that appear in the supply market, companies can also promote the formation of strategic entities with existing suppliers and radical new suppliers, achieving a win-win situation.
There are several ways to achieve this kind of incremental innovation. For example, by providing resource support and incentive mechanisms for suppliers, joint innovation can be achieved (despite few executives truly realizing the potential benefits that the procurement department can bring to the company by using the innovative thinking of suppliers). Cooperation is one way; using influence is another way, but no one believes that joint innovation can be achieved solely through authority. Research in this area is ongoing, and several theories are being tested in practice.
Christensen points out that discontinuous innovation occurs when market entrants or existing companies break conventions and change the rules of the game. Usually, this kind of innovation starts with providing products or services that established companies don't take seriously, which are obviously of much lower quality (early digital photos, low-cost airlines, etc.). Market-leading companies believe that these lower-quality products or services will never be able to compete with what they offer. However, the implementation of "sustaining technology" (process and product development) leads to rapid incremental innovation, enabling these low-end product and service providers to catch up with and surpass their powerful competitors, making it difficult for them to survive. Currently, no one has studied the impact of this kind of innovation on procurement strategies. Perhaps people assume that it only affects marketing. But our research shows that the supply market can also be influenced by discontinuous innovation, so corresponding supply strategies must be developed to respond. If discontinuous innovation in the sales market can make successful companies flee, the same applies to the supply market. Discovering subtle innovation signals
From this, we can see that for procurement and supply strategy makers, the main challenge of discontinuous innovation lies in how to form a kind of cooperative relationship—maintaining long-term alliances with strategic partners while not excluding the possibility of collaborating with other suppliers in a more radical way. Maintaining a long-term cooperative relationship with strategic partners may bring stable, incremental innovation and benefit the enterprise significantly. However, this cooperation cannot help either party detect the early subtle signals of discontinuous innovation or provide support for radical improvements.
Earlier, discontinuous innovation made the ice-making industry disappear with the invention of refrigerators. The aviation industry in the 1990s also suffered a similar shock. A more recent example is how it led to the rapid demise of the film industry because the appearance of digital cameras posed a significant threat to the well-known film brand's survival.
But doing things this way yields solid results.