Methodology for Managing Disruptive Innovation by Value-Oriented Portfolio Planning

Abstract

Disruptive innovations (DI) have the potential to fundamentally change markets and their power relations: Specifically, established companies are confronted with the threat of being forced out of the market by DI. At the same time, companies also have the opportunity to control the market’s development by developing DI themselves. This raises the question of how a proactive management of DI can be systematized. Here, the approach of innovation portfolio management (IPM) provides support by identifying, evaluating, and selecting a company’s most promising product ideas. The management of DI is challenging due to their characteristics, such as diversity, high uncertainty, especially with regard to customer acceptance, difficult comparability with existing products, potential for cannibalization, and substitution of existing products. For this reason, new approaches to managing DI are required in literature and practice. This paper presents a novel methodology to support—especially established—companies in proactively generating DI via existing processes in their IPM. For this purpose, the methodology supports the early identification of the product idea’s disruptive potential so that these can be handled appropriately in the further course of the process, such as the evaluation of all product ideas in the company during IPM. Thus, the risk can be minimized that promising DI are not rejected due to unsuitable procedures, but are brought to market maturity. The methodology contributes to the literature by showing how DI can be pursued embedded in existing corporate structures and also in competition with other product ideas in the company—in existing approaches, DI is primarily considered singularly and detached from the existing corporate context. The methodology is validated by the example of the digital camera, which disrupted the photo industry, as well as through interviews in a practical context.

Keywords

• disruption
• disruptive innovation
• innovation
• innovation management
• innovation portfolio management
• value-orientation