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Examples of Disruptive Innovation in Enterprises

Peter Drucker famously said, “Every organization must prepare for the abandonment of everything it does.” 
Here are successful companies that innovated for impact to transform themselves into a new business –

  1. Tiffany was started in 1837 by Charles Tiffany and John Young, in Brooklyn, Connecticut, as a “stationery and fancy goods emporium”.  In 1862, during the Civil War, the company supplied the Union Army with swords, flags, and surgical implements. After the war Tiffany focused on jewellery.  It is now renowned for its luxury goods and opulent stores.  Tiffany was acquired by LVMH (Louis Vuitton) in 2021 for $16B.
  1. Berkshire Hathaway was originally a textile manufacturing company established by Oliver Chace in 1839 in Rhode Island. The company went through many mergers and acquisitions in textiles but by the 1950s the textile business was in decline and cutting back.  A young entrepreneur, Warren Buffet, began buying stock in Berkshire Hathaway after noticing that the stock price fell whenever the company closed a mill. In 1962 he became the majority owner.  He used it as a vehicle to buy stakes in insurance companies and other businesses.  By astute investing, Buffet grew Berkshire Hathaway to become the largest financial services conglomerate in the world with a market capitalisation of over $700B in 2022.
  1. Nokia was founded in 1865 by mining engineer, Fredrik Idestam, as a wood pulp mill in Tampere, Finland – which was then part of the Russian Empire. It became a manufacturer of rubber boots and cables before specialising in electronics.  In the 1990s it focussed on telecommunications technology. From 1998 to 2008 it was the world’s largest supplier of mobile phones.  When Apple and Samsung came to dominate the smartphone market, Nokia became a network equipment manufacturer.
  1. Avon was founded by David McConnell in New York in 1886. Initially the business sold books door-to-door.  McConnell gave samples of perfume as an incentive for book sales but found that demand for the perfume exceeded that for the books. He went on to focus on perfumes and cosmetics and built the Avon brand and empire based on an army of  ‘Avon Ladies’ selling direct to customers.
  1. Nintendo was started in 1889 as Fusajiro Yamauchi as a company to produce Japanese hanafuda playing cards. Nintendo produced its first console, the Color TV-Game, in 1977. It gained international success with its game Donkey Kong in 1981 and with Super Mario Bros. in 1985. It has gone on to sell a range of highly successful video game consoles including Game Boy, the Super Nintendo Entertainment System, and the Wii.
  1. In 1891, a 29-year-old businessman, William Wrigley Jr. began a company in Chicago selling scouring soap and baking powder.  As an innovation he offered two packages of chewing gum for each purchase of a can of baking powder. When the chewing gum proved more popular than the baking powder, Wrigley switched the focus to gum.  The Wrigley Company is now the largest manufacturer and marketer of chewing gum in the world. In 2008 Mars Inc. acquired Wrigleys for $23B.
  1. The toy company Hasbro was originally founded by the Hassenfeld Brothers in Providence, Rhode Island, in 1923 to sell textile remnants and then expanded to produce pencil cases and school supplies.  In the 1940s they started selling toys and their first major success – Mr Potato Head. The company now has revenues of over $5B and its products include Transformers, G.I. Joe, Power Rangers,  Micronauts, Monopoly, Furby, Nerf, Twister, and My Little Pony.
  1. Gap was founded by Donald Fisher in 1969 as a shop selling records and tapes alongside jeans. The name originates because Fisher targeted ‘the generation gap’.  He was friends with Walter Haas, President of Levi Strauss.   They agreed to a deal whereby Gap would stock only Levi’s jeans – in every style and size.  The Gap stores guaranteed never to be out of stock because Levi’s gave them overnight replenishment.  Gap expanded rapidly and in 1974 added its own branded merchandise.  It went on to become the largest speciality retailer in the USA.

The lessons from this –

  1. Be good at “ Look Ahead “
  2. Recognize successful Business Innovation and Innovation are the result of being good at –
  • process and predictability
  • having insights and inspiration
  • being tenacious
  • developing new competencies
  • identifying and motivating talent

3. Commit to identifying and making good on – new opportunity, the changing business landscape, creating meaningful   new value, etc.

4. Having the courage and ability to –

  • change
  • evolve the business model
  • realize that periodically “what got us here, won’t get us there”
  • ask good questions and learn fast
  • explore and act on good insight

June 15, 2022   CAIL Innovation commentary    905-940-9000