Surviving disruption – major, game-changing innovation – is one of the greatest challenges managers in established firms face. On one hand, we’ve been warned disruption can sneak up and quickly destroy a business or an entire industry. On the other, experience tells us it can take years, even decades, to play out. Some threats never bear fruit at all. Yet, whether a company moves too early with their innovation or too late, nearly all waste resources, and squander competitive advantage and growth opportunities along the way.
Nathan Furr, innovation expert and assistant professor of strategy at INSEAD, believes hybrid products are a smart and largely overlooked approach to managing the transition. Hybrids, he explains in the November issue of Harvard Business Review, combine elements from emerging, potentially disruptive technology with existing technology to create a new product, service or business model that sits between competing innovation generations.
The hybrid approach allows companies to not only learn as they go, but also shape the future of their business and industry. When Thomas Edison’s invention first threatened gas lighting, incumbent firms borrowed the filament technology from Edison’s electric bulb to improve the efficiency of their gas-powered lightbulb. Contemporary examples include hybrid electric vehicles (Toyota Prius) and hybrid cloud-computing architectures (MS Office 365).
“While the purpose of most hybrids is to buy time to adjust to a new landscape, some can be used to stave off disruption entirely,” says Furr, who co-authored “The Prius Approach” with Daniel Snow, an associate professor of business management at Brigham Young University. Drawing from ongoing research, the expert duo outline seven types of hybrids alongside four steps to implementing a hybrid strategy.
- Identify the right type of hybrid. Is your hybrid intended to help you learn about a new technology or develop new capabilities? To gauge customers’ willingness to adopt a potentially disruptive innovation? Or is its purpose to shape the future of your industry or market? To create new demand? To preserve profits for a time?
- Analyze your capabilities. What competencies are needed to produce the hybrid? Of those you don’t currently possess, which should be developed in-house and which can be acquired externally? Also, can the hybrid be brought to market through existing operations or is a new business model required?
- Allocate resources. Does your hybrid require additional technological capabilities? You’ll need to increase R&D spending. Are you targeting new customers? Boost marketing funding. Developing a new business model? It will require investment in a new sales force and distribution channels.
- Map the product life cycle. Is it meant to be permanent or temporary? Most hybrids will not become major new product categories; the majority are stopgaps, intended to be springboards to the adoption of new technology.
“At their core, hybrids are temporary tools that offer an alternative to the binary yes/no decision to bet the farm on a disruption and help you bridge the long, uncertain span of a discontinuity,” explains Furr, co-author of “The Innovator’s Method” (Harvard Business Review Press, 2014). “Used well, they can be good sources of profit, and stepping stones to survive and prosper in the next generation.”
You might also be interested in following Furr’s innovation column on Inc.com. His latest article discusses “The Best Way to Cultivate Innovation from the Inside.”