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Highlights
- Some innovations dominate markets, and some don’t.
- Our “four Cs” framework allows executives to foresee which innovations will play an oversized role in creating the future.
- To conquer markets, an innovation must be strictly better than its competitors across four dimensions: cost, convenience, consumer experience, and compliance.
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Four Cs framework
Disruptive innovations define our modern world.
What would life today be like without laptops or GPS-enabled smartphones? Yet not all innovations are created equal. While some fully conquer their respective markets as soon as they appear—much as personal computers drove typewriters into obsolescence and GPS-enabled maps replaced paper maps—other innovations have instead coexisted with, rather than displaced, their erstwhile competitors. E-readers, smartwatches, and green energy are examples of this latter category. These innovations have existed alongside paperback books, analog timepieces, and fossil fuels for years without dominating their respective markets.
Diverging paths like these present an essential question for C-suite executives. How can one predict the disruptive innovations that will dominate markets and those that won't?
An analysis of more than a century’s worth of transformative innovation reveals an answer via a new “four Cs” framework. The four Cs of disruptive innovation are cost, convenience, consumer experience, and compliance. History shows that a new innovation will dominate its market only when it is strictly better than its competitors across all four dimensions. Conversely, technologies that are merely superior in some respects but not others will be forced to share markets with older rivals.
Disruptive innovations define our modern world – the only question is which ones?
Read on to learn more about the individual components of the four Cs framework.
1. Cost
Does the innovation cost less to implement and operate than its older rivals?
If the answer is no, it will fail to dominate markets until it becomes more affordable.
Cost considerations have always reigned supreme for cash-strapped entities. If an innovation is not the most affordable option, many users will decline to use it.
Three examples of innovations that have (so far) struggled to dominate markets because of their relatively higher costs: solar and wind power, hypersonic flight, and 3D printing.
2. Convenience
Is the innovation easier to use on a daily basis?
If the answer is no, it will fail to dominate markets until it becomes easier to use.
Time is money. If an innovation incurs an inconvenience surcharge, many users will decline to use it.
Three examples of innovations that have (so far) struggled to dominate markets because of the inconvenience associated with their use: virtual reality headsets, brain-to-computer interfaces, and cryptocurrencies.
3. Consumer experience
Does the innovation satisfy the same consumer itch?
If the answer is no, it will fail to dominate markets until it can replicate, or surpass, the experience of the previous technologies.
Consumers purchase products to satisfy specific needs, some of which are utilitarian and some of which are emotional. An innovation must address the same functional and emotional needs or many users will decline to use it.
Three examples of innovations that have (so far) struggled to dominate markets because of their inability to address the consumer's full experiential needs: smartwatches, e-readers, and online learning institutions.
4. Compliance
Is the innovation free of restrictions imposed by regulators to slow its adoption?
If the answer is no, it will fail to dominate markets until the regulations restricting its use are waived.
Entities cannot use tools that the government has strictly prohibited. If an innovation is partly or wholly illegal, most users will decline to use it.
Three examples of innovations that have (so far) struggled to dominate markets because of regulations restricting their use: aerial drones, gene editing, and self-driving cars.
Foreseeing the future
Many innovations succeed in being better than their rivals across two or three dimensions of the four Cs framework.
As such, they will be popular among some consumers, but not a majority of consumers, until they can achieve product superiority across all four dimensions. Once that happens, however, watch out. Mass adoption can be swift.
For example, consider that peer-to-peer rideshare services such as Uber were cheaper, more convenient, and offered a nicer user experience than taxis. However, regulatory restrictions initially held them back—until one day, they didn’t. Once those regulatory restrictions were lifted, peer-to-peer rideshare services took off and there has been no looking back. This path is typical for innovations that have achieved superiority across each of the four Cs.
Likewise, solar and wind energy production dominate coal energy production across all four Cs except for cost. This implies that as advancements in photovoltaics and turbines drive down the price of green energy, a breakneck push to transform electricity grids will be underway. Conversely, if coal remains cheaper in certain regions, the polluting fuel will not be entirely abandoned.
More disruptive innovations lurk in the wings, waiting for their moment in the sun as soon as specific failings are addressed. Will aerial drones be given the green light from regulators? Will virtual reality headsets become less cumbersome? Will 3D printing become cheaper? If the answer to any of these questions is “yes,” executives should be on the lookout for rapid disruption.
Regarding all other innovations, the recipe for successful foresight is the same. By identifying an innovation’s position within the four Cs framework and determining which failing(s) are holding it back from mass adoption, executives can foresee the technologies that will dominate in the future, transforming whole industries in their wake.
Disruptive innovations have defined our modern world. Now, more than ever, they will continue to do so. The only question is which ones?
