What is the meaning of disruptive innovation?

About Vale

11/27/2017

What is the meaning of disruptive innovation?

Qual o significado de inovação disruptiva?

Do you know what disruptive innovation is? The concept seems difficult, but it is actually quite simple. In general, the business innovation focuses on two innovation models: sustainable and disruptive.

Sustainable innovation

Sustainable innovation is focused on advances in the current technology and ways to extract more value from large markets. It seeks to sustain what has been achieved and to improve it, such as Samsung or Apple, which release updated versions of their phones every year.

Disruptive innovation

But the disruptive innovation has a different concept. It transforms an existing market or sector by introducing simplicity, convenience, and accessibility where complexity and high cost were the standard. They do this in part by taking advantage of new technologies, but also by developing new business models and exploiting old technologies in new ways. Initially, a disruptive innovation is formed in a market niche that may seem unattractive or inconsequential to the industry, but eventually the new product or idea completely reshapes the industry.


Examples of disruptive innovation

Personal computer

Um computador Apple Mac original com teclado em exibição em um museu de Londres

A good example of disruptive innovation is the rise of the personal computer because a new mass market was created. Computers in the 1970s had expensive structures, cost about US$ 200,000 and were sold only to large companies and universities. One of the pioneers of personal computing, Apple, began selling its first computers in the early 1980s. Initially, the product was not at a level capable of competing with US$ 200,000 computers, but it was not a problem for Apple because almost nobody could pay or use the expensive computers. Slowly the innovation improved and after a few years the more affordable and smaller personal computer became good enough so it could do the work of its expensive predecessors. This created a huge new market and ultimately eliminated the existing sector.


Virgin Atlantic Boeing 747

Virgin Atlantic Boeing 747

British businessman and founder of the Virgin Group, Richard Branson says that disruptive innovation is not a tactic, it is a mindset. Branson started its airline, Virgin Atlantic, with a second-hand Boeing 747: “We were against British Airways with 400 planes and Pan Am with 400 planes... and nobody thought we could survive”, he points out. “So we had to make sure what would happen in that 747 was so good and so fun that the story would done the rounds”, he added. Virgin has gone from a plane to two, to three, and now Virgin Group has a fleet of 37 planes, with 21 already ordered, and has become another good example of disruptive innovation.


Electric vehicles and energy storage

Another example of disruptive innovation is the company Tesla. It offers disruptive innovations in large established markets, such as transportation and electricity markets, and stimulates new market opportunities through electric vehicles and energy storage. Tesla has been increasing its leadership with batteries of good performance and price that allow cars to be fast, go further (than other electric vehicles) and be safer than internal combustion engine vehicles.

Carro elétrico Tesla modelo X carregando em um Tesla Supercharger

Tesla registered about 400 thousand reservations for its Model 3 in a single week – pre-sales that will ultimately accrue more than US$ 16 billion in vehicle sales. The growth of the electric vehicle and the acceleration of the Tesla Model 3 at the end of 2017 and 2018 may also increase the demand for nickel, thus benefiting Vale.


Business innovation

The business innovation is paramount for Vale. According to the mining company, the meaning of innovation goes beyond the conventional concept. According to Vale, to innovate is to think, act and do differently. No wonder the company is at the forefront of innovation in the mining sector with a number of projects such as the truckless system at the S11D Eliezer Batista Complex and Vale Quartz, which will turn tailings into kitchen sinks.


Learn more about Vale’s actions focused on innovation
 

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What is the meaning of disruptive innovation?