Human Resources is filled with leaders that have uncanny intuition. Any one of us who has been in HR for longer than a decade knows this to be true: our intuitive powers serve us well, and those nagging feelings have saved our companies and employees from harm time and time again. It’s why I feel so strongly that HR managers should be out front, leading the way when it comes to cutting-edge business ideas. Right now, I want to talk about a business concept that might not have made it to your attention, but it should most certainly be top of mind when it comes to your management conversations: disruptive innovation.
A term coined by Clayton Christensen, it’s described as “a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.” The concept is quite simple: most companies create products and services that are priced to service the upper echelon of the market. It’s the quickest way to profitability and it ensures longevity as long as there remains lack of competition and that touch of exclusivity. Where things become complicated is when disruptive innovation occurs, bringing a similar or better offering to the lower echelon of the market, allowing for mass consumption of similar products and rendering the higher-priced innovation no longer worth the high cost. The value proposition drops. Essentially, they’ve been outthought and undercut in price.
Examples of this type of disruptive innovation can be seen all over the new service economy: Airbnb is cutting into both the housing market and dropping hotel reservations around the world. Uber has made private cars accessible to anyone with a phone and approved means of payment. PayPal and Bitcoin are slowly but surely cutting into the finance market, making payments and monetary transfers available without impacting credit ratings. What these companies have done is essentially take on long-standing industries that no one would have dared mess with for decades and brought them to the masses. Private cars, home rentals, and instant financial transactions are no longer the luxuries of the wealthy: those markets are wide open to competition now in a way not previously seen or experienced.
But now you’re asking: what does this have to do with HR?
Everything. It has everything to do with HR.
As the individuals who hold the keys to corporate capacity, we cannot leave it to our other C-suite and business partners to foresee where the workplace is going. It is our responsibility to stay on top of trends that could endanger our workforce and render our companies obsolete if we’re in large, established organizations; and we’re charged with finding opportunities to add to our workforce agility if we’re in smaller to medium-sized organizations. We should look for any chance to shift our talents to a new strategy if it will ensure the longevity of the company’s goods and services. We are responsible for shareholder value. Instead of reacting behind the market, let’s stand out in front and act as the early warning system. Why can’t HR be the one to bring the next big product idea to the table? Why shouldn’t we be the ones who create the next big service offering along with the organizational structure and projected costs and savings around the decision? Disruptive innovation isn’t the bane of HR’s existence: it’s the path to a greater future.
I’ve spoken a considerable amount about my belief that HR should be where the next CEO of a major organization is chosen, and these offerings are the way to that hallowed ground. Shall we remain reactive when the next big idea comes, or shall we lead from the front, harnessing the power of disruptive innovation to bring our companies to a bigger, brighter future?
The choice is ours. Let’s make the right one.