wartsila disruptive innovation explained

The world as we will know it

There comes a moment in every creative person’s life when someone asks them, “When?” But answering that question isn’t always easy. When did you come up with that one big idea that disrupted entire industries, laying waste to once successful companies?

Text: Ann Törnkvist Photo: iStock

The term “disruptive innovation” isn’t new. In 1997, Clayton M. Christensen, a professor at Harvard Business School, published his book “The Innovator’s Dilemma.” For leaders across all industries, the book’s subheading is perhaps even more interesting: “When new technologies cause great firms to fail.”

Even companies that are aware of the need to continually innovate can be kicked to the kerb. Or as Christensen puts it, “Well-managed companies that have their competitive antennae up, listen astutely to their customers, invest aggressively in new technologies, and yet still lose market dominance.”

No one wants to be the CEO who costs his employees their jobs, yet it happens – often painfully so. This we forget at times, equating the world of business into nothing more than a game of Monopoly without asking what it means for all of us.

When Microsoft, for example, bought part of Nokia – the ailing powerhouse of the Finnish economy – it was just another blow in a long drama. Of course, the Finns have analysed the whys to no end, books upon books, dissecting a national trauma of sorts. Microsoft has since called the purchase a mistake.

Don’t listen. Tell. Or, at least, do both.

There are many more examples. And what Christensen says early on in “The Innovator’s Dilemma” is that listening to your customers might actually be the wrong thing to do.

In an earlier issue of Twentyfour7., the CEO of the Norwegian ship owners Eidesvik, which has pioneered LNG off-shore vehicles with Wärtsilä’s help, said something similar. “Just like car industry leaders,” he argued, “those in shipping should tell customers what they need. Don’t wait for them to ask.”

Use existing and upcoming technology, identify a future need, head toward it. Or even create a need. Could that be a way toward disruption?

Yet sometimes it’s the opposite. The need, or at least the demand, is so obvious that it’s just a question of technology catching up. Sometimes a product comes along that makes even the savviest consumer go “Doh!” because it’s so simple. Like Skype, which met the very basic human need for loved ones to see each other’s faces. Or, when Netflix started to post DVDs in re-sealable and returnable envelopes, saving film buffs a trip to the video store. The established Blockbuster was disrupted by Netflix because a large part of their revenue came from late fees – Netflix had no late fees.

But there are other examples where technology has made huge strides, but industries have lagged behind – for various reasons. When the music industry was almost brought to its knees by illegal downloading over a decade ago, could a Spotify-like service have lessened the blow? Did it have to take so long? And journalism, too, is a good example, cutting staff to deal with declining advertising revenue, but so far making it difficult for news consumers to access an iTunes-like library of content that would make consumption easy.

So how do you disrupt?

What are the mechanisms behind disruption? Can a major corporation be a disruptor, or does the disruption have to come from a small player? Helena Lindemark, a Stockholm-based consultant who has worked with sustainable development and intrapreneurship since the early 1990s, says that companies have grown too preoccupied with the bottom line. “When quarterly reports steer your action, you forget to nurture those important components that make a company profitable. Your staff’s wellbeing is key, but so is making sure they are asked to contribute in new forums and in new ways to the dialogue of where the company is heading,” she tells Twentyfour7. “Your staff, and that includes the janitor and the receptionist, have inside knowledge. They could be the ones who come up with the next big idea.”

Although, she also underlined that the next big idea does not need to be some other-worldly invention that takes us all by storm, but it can be as simple as finding the next logical step – like Skype, Spotify, Uber, Netflix, AirBnB. Communication, music, transport, entertainment and hotels aren’t new markets; these companies just served their consumers better.

Companies should move staff around, says Lindemark, not just organizationally but also physically, to foster creativity. Then the idea that only ballsy start-ups can challenge the status quo becomes extinct. She called in-house disruptors “spot-on” and said there’s value to allowing people just to go a bit crazy with ideas. And that failures should not be seen as failures but as stepping stones to success.

And big companies have an advantage that start-ups don’t: an existing customer base. The key is not just to keep asking customers about what they need but also to present them with ideas on which they can give feedback. “Have the courage to test things, have the courage to create things, build something concrete,” she says. “That’s of utmost importance.”

Lindemark also argues that companies sometimes forget to look back, to revisit how they and other companies have solved problems in the past. Often, there’s an example just waiting to be rediscovered. Old ways of working combined with new technology can be a gold mine: “You don’t have to reinvent the wheel, you can look back and think ‘Oh, that’s how we did it then, why aren’t we doing it like that now?’ It’s a systematic perspective that’s important to include.”

The Shipping News

Many of the disruption stories tell about B2C companies, and B2B is a somewhat different, and slower, beast. When one looks out at sea, for example, we see enormous ships operating on tight schedules and tighter budgets. That can make it hard to spot the one trend on the horizon set to change shipping. There are, of course, bigger trends – the sharing economy, digitalisation, energy efficiency – that will make a mark. So disruption is not about new technology per se but rather new ways to put it to use.

Wärtsilä already two years ago introduced the idea to 3D-print spare parts on board, for example, to reduce down-time and get a ship safely to port, where a team of engineers, who have monitored the challenges from afar, can implement a more long-term fix. That’s decentralised manufacturing, digitalisation and big data all rolled into one service.

That that particular idea makes use of 3D printing is important because that’s a technology that could also have ramifications on the very demand for shipping, according to disruptive innovation expert Rick Mueller at Wayne State University near Detroit.

“It seems clear that the idea of ‘printing’ goods will lead to decentralised manufacturing, which will in turn diminish the need for and importance of ocean shipping,” he tells Twentyfour7. “That may seem too distant a prospect to warrant concern, but once it’s discovered that through printing, versus traditional manufacturing processes, products can be made in configurations having properties that can’t be made any other way, the world of manufacturing and shipping will change quickly and dramatically.”

Shipping’s of course already changing, not least due to environmental legislation, but with a ship’s lifespan, many changes aren’t as rapid as in other industries. While AirBnB made hotel owners of us all, and Uber wrested power away from taxis, these are on-the-fly purchase decisions – not contracts that span years and can involve enormous amounts of money.

Wärtsilä’s decision to invest in in-house disruptors as a complement to traditional R&D shows that even the oldest of companies are well aware that they cannot rest on their laurels. Disrupt before you are disrupted.

Power up for the future

A good example of old ideas in new clothing, as Twentyfour7. reported last year, is heat capture. In energy, district heating is tried and tested. Sometimes new solutions are not local, but glocal. In Stockholm, for example, a suburban thermal plant has long burned Italian garbage to keep the Swedes warm.

Heat capture relies on a central tenet that affects all future energy production – decentralisation. In other words, make use of what you’ve got. Sow where you stand to reap where you stand. Decentralisation can be local, with renewable technologies becoming cheaper and more accessible. Or glocal, as the Stockholm example above, or globalised – that’s where new ways to transport energy more efficiently come into the picture. And that’s where you can’t avoid talking about batteries. The day will come when we can store energy more efficiently, opening up new ways to do business. Imagine, for example, cargo ships heading home with empty hulls using charged batteries as ballast.

“It is not at all difficult to envision a world in which power is made, stored, bought, and sold in batteries and, much like propane, is sold in tanks,” Mueller says. “Once that happens, you’ll see creative elements take root and emerge from a great number of populations, in locales that are currently starved for conventional power, and start to compete, and quite possibly surpass, the conventionally powered world.”

“Once again, it seems far off, but I’m sure that Kodak felt the same way about phone cameras, all the way up until they filed for bankruptcy.”

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