Disrupt Or Be Disrupted. Really?
What do banking customers want? [Source: http://www.youtube.com/watch?v=NU0cBL_Anng]
Innovation - literally "to make new" - hasn't always been considered all that desirable, in the corporate world or anywhere else, for that matter. Executives, sometimes, become so focused on pleasing customers and shareholders that they miss the forest through the trees. Indeed, these executives don't fail because they make bad decisions; their businesses fail because of their good decisions! As they focus on bringing more and better products to market (so-called sustaining innovation), the established enterprises tend not to see other things that customers want.
Disruptive innovation doesn't always work out the way it's put forth in books. And the financial services sector presents some interesting examples. A disruptive innovation to the banking industry in the late 1990s was the creation of rolled-up, ready-for-sale products like subprime mortgages, collateralized debt obligations, and mortgage-backed securities. Banks were reaching a whole new audience and creating an untapped market with these "brilliant" innovations.
One banker, the CEO of Canada's TD Bank, didn't like what he saw and instead focused on things like customer service. At the time, he was criticized for not being a disruptor. He kept bank branches open on weekends and past 5:00 pm on weekdays. He made sure customers could bring in their pets and that children could put loose change into coin-counters. Customers received free ballpoint pens. Years later, as the financial services sector was collapsing from the weight of those failed debt products and the global economic crisis ensued, TD Bank was instead expanding quickly throughout North America.
Should we fault TD Bank's CEO for not jumping on the disruptive innovation bandwagon? Of course not. He innovated his organization in a traditional (i.e., non-disruptive) manner and weathered the global economic crisis.
Like lots of theories and ideas, it's easy to get caught up in the hype. Almost anything that sounds good and comes out of a top business school can be especially attractive. But I think at the end of the day, it's not where we create ideas or how disruptive they are in relation to a given market. It's the quality and lasting power of those ideas that truly count.