Renée Mauborgne: The Beauty of Non-Disruptive Innovation

Guy Kawasaki:
I'm Guy Kawasaki and this is Remarkable People. We are on a mission to make you remarkable. Helping me in this episode is the remarkable Renee Mauborgne.
Her book, Blue Ocean Strategy, co-authored with W. Chan Kim sold over four million copies and is recognized as one of the most iconic and impactful strategy books ever written.
It helped many organizations achieve success by creating and serving uncontested market spaces. And now she's back with another remarkable concept, innovation without creating disruption. That's the subject of her latest book. It's called Beyond Disruption: Innovate and Achieve Growth Without Displacing Industries, Companies, or Jobs.
Renee's accolades are numerous. She was ranked as the number one most influential thinker in the world by Thinkers 50.
She is the first woman to ever top this list. She is also a fellow of the World Economic Forum and served on President Barack Obama's board of advisors for historically black colleges and universities.
We are excited to dive into Renee's insights and expertise on business strategy and innovation.
I'm Guy Kawasaki. This is Remarkable People. And now here is Renee Mauborgne.
Should Reed Hastings have told himself “I'd rather not destroy a blockbuster. I have to think of another idea for a business.”
Renee Mauborgne:
I can't speak to that. He could have asked that question and come up with another non-disruptive, as we call big opportunity because both disruption and then the new idea of our book, which is creation without disruption or displacement, which is non-disruptive creation. They're just two viable paths.
It's just that one is always about disruption, which is what Reed Hastings did. And none of us are really systematically looking at all the non-disruptive opportunities we can have before us. So both are open to him.
Guy Kawasaki:
With your book and with your proselytization of this concept, entrepreneurs will now think of disruption, non-disruption as a variable to consider as they come up with ideas in businesses.
Renee Mauborgne:
That's our hope because why as an executive would I want to deny myself this huge opportunity space where I don't have to take on the big guy, I don't have to take on established players. There's a lot of sunk costs that buyers have as well in an existing product or service that I may need to displace.
And here is an opportunity to create without destruction, without taking on players have huge profitable growth as well that we articulate in the book and we show through that. So as an executive, of course, I want to know what all my options are before me and I do want to think about both Guy. Yes.
Guy Kawasaki:
And what if I'm that executive and you tell me this and I say to you, “But at least if I am going to disrupt the business, there is proof that a market for this exists. But if I'm going to go completely non-disruptive blue ocean, either combination, then there's this whole big question arises of does the market exist?”
Renee Mauborgne:
In our book we talk about in the second part of it is like how do you get a handle on creating these markets, these non-disruptive markets in a more systematic way. And one of the paths to doing it is looking at existing problems that have been unaddressed or assumed as just a necessary difficult part of life.
So if you look at Jim McKelvey who created the Square Reader, as we all know. He found that he couldn't make a blown glass sale. And so he said, “Okay, that's a problem for me.” Him and Jack Dorsey started looking at just for me or is it a problem for all small micro enterprises?
And he started to realize that the problem he experienced was a widespread problem and people all wish that they could accept credit card payments, which is the most used form of payment. And so he said, “Okay, then there are a lot of people.”
So we talk about how do you assess if the market you're going for who cares besides you? How do you assess the size of that market? If there's a big market and there's huge opportunity for people or there is a huge pain for people that we're taking for granted, then that becomes a market worth exploring and that's how you need to start thinking about it.
So yes, you're right in the sense that you can say, I can see an existing industry and I can know the target is there, but you have to know you're up against big forces as well. They don't just sit back and say, “Steal my lunch from me, take all my money from me.”
They're going to fight you as well. There are the sunk costs. There's a lot of other issues at play and these non-disruptive opportunities when you start thinking about them by when you start putting on the lens of non-disruptive, you start seeing opportunities all around that when you didn't have the lens to think that way, you weren't looking for. So we try to make that more systematic for you. Yes.
Guy Kawasaki:
But couldn't I say shame on you, NCR? Shame on you all you point of sale hardware, cash register companies. Why didn't you think of Square first?
Renee Mauborgne:
Had they started to think about non-disruptive and real growth my guess is they were making enough money where they were sitting, there was enough incoming cash flows regularly. Just the cash orders kept cash flow kept coming in. They didn't feel that burning need to do that, and they sat satisfied. No one wants to disrupt their own business, of course, so they don't want to disrupt themselves.
And they started thinking about “What other growth opportunities do we have?” Leveraging what we have, are there any non-disruptive opportunities outside that we're denying? They could have done that very well.
So it really depends on the growth appetite of a company. It also depends on how their cash flows are flowing. And you'll find many businesses, they're very few nowadays increasingly, but are sitting on nice steady cash flows that keep coming in that are repeated and they're not being disrupted. They tend to be a little less hungry, but it could have very well been for them as well. Yes.
Guy Kawasaki:
This is a very theoretical question, but do you think that society would be better off if Kodak and Blockbuster were still in business today or did they deserve to be disruptive and they were dinosaurs, they should have died?
Renee Mauborgne:
It’s very important to understand is we are not saying disruption isn't important and we're not saying that they're industries that shouldn't be disrupted. There are many industries that invite their own disruption because their service is poorer, their infrastructure is outdated, they're not leveraging the newest technologies.
So disruption exists, but we're saying there's another half of the market universe that was been hidden and that we can start to think about creating without displacing, without tearing down as well, and we should go there.
So a lot of industries are ripe for disruption and that is a viable path, but let's not shut ourselves off also from all the non-disruptive opportunities we can do.
And that's what we're saying especially, and chime in if you'd like, but the one power of non-disruptive creation is it allows me to pursue economic gain in a way that does not create social displacement or human hurt in the process.
I think that balancing increasingly for companies and even for the employees to want to be there showing that we create without only destroying is also important. I would as an organization, as a CEO, I feel irresponsible when I'm thinking innovation, to not think both camps and ask myself, “Which one?” Certain businesses, yes, we should disrupt.
They're inviting it, they're outdated. In certain industries, what can we create? As you just said, NCR, to create what Square reader did actually and make that your business instead of being now blocks business. So yes.
Guy Kawasaki:
So are you suggesting that a CEO would talk to her R&D people and say, of course we have to maintain our business for current cash flow and we would like to disrupt where we can create new markets. But I also want you to consider non-disruptive. Is that something that you think that they should just come out and say, open your eyes to this other kind of opportunity?
Renee Mauborgne:
So whether it is the CEO or it's the head of the R&D or the head of... it depends on each organization and how the CEO communicates. But to that answer, I would say yeah. So let's say to your point now you talked about a large corporation. I have an existing business, so obviously I don't want to disrupt myself because then I'm losing current cash flow for uncertain future cash flows.
That is often very tricky, right? Because Wall Street investors are employees, they don't want replacement revenues as much as they want new revenues.
So now I have two alternatives. If I'm going to disrupt, that means I'm taking on another industry, I'm going up. The fact that I'm disrupting means the industry exists and there's big established players in there. If I have a lot of lazy players in that industry, I might want to disrupt it. If I've got a lot of strong, really credible players in that industry, that's a tough industry to disrupt.
So now I'm going to say, “Okay, as a CEO, what industries that we're thinking about, do you have any ideas that you want to disrupt in?” Because you find on the other side there's lazy companies, they haven't really changed their service, their infrastructure is poor. They may say, “Yeah, we see some”, they may say, “No, we don't see some.”
Then I'm going to say, “Okay, what are about non-disruptive opportunities out there? Can we see beyond the bounds of our industry problems that have long existed but people have taken for granted that we could go and start to create?”
And so I would, as a CEO or the head of my R&D division, I would absolutely want to start thinking this way. Yes.
Guy Kawasaki:
Suppose you were the CEO of Kodak back in 1970, and this engineer shows up and says, “Listen, I have invented digital photography. You see this big thing on my table, it can take pictures, people won't have to buy film.”
Well, with hindsight, we probably all think Kodak should have jumped onto that technology. What would've been a reasonable and forward thinking reaction at that point?
Renee Mauborgne:
I'd have to step back. But I think part of the fear of that was it meant destroying everything Kodak was. It was self-disruption. Now that is very hard. People's livelihoods, their business, their core competence, everything behind them is right there. And so that becomes a tougher fight. You start to think about the effects of all your employees, of your community. It's a harder one.
And these aren't stupid organizations. When they looked at it from a business perspective, it was hard to swallow when you're disrupting yourself.
And could Kodak at that time, had they had the opportunity to start thinking about what else we could maybe do, because that wasn't the challenge. Is there that possibility? We would say yes, there is a possibility for non-disruptive opportunities, but I can't place myself at that time.
But I can understand why Kodak was not able to do that nor make sense of that. There's a lot of calculations, just like you advise of parent about what they should do with their child. So easy when it's not you.
Guy Kawasaki:
No kidding.
Renee Mauborgne:
Then it's your own child. Oh boy, it's a difficult, right? That was their own child they're talking about.
Guy Kawasaki:
Trust me, trust me, I understand that better than you even want to know.
I would say whether this is disruptive or non-disruptive, don't you think a CEO should be having the attitude like, if we don't disrupt ourselves or if we don't non disrupt ourselves, two guys, two gals, a gal and a guy in a garage, they're going to do it to us.
Should we continue to sell the Apple two, to be loyal, to milk the cash cow, not throw everything out of whack or do we jump to a Macintosh?
Renee Mauborgne:
To that I would say is I think that when you ask a company to disrupt themselves, they can nod their heads and say, “Oh yeah, sure, sounds good.” But you have just raised a level of fear and anxiety in that organization tremendously. And I think what I would say as a CEO is “Are we continuously offering a leap in value to that marketplace?”
That's all I want to know. I want to know that without any marketing at all, people are going to be talking about us and there's going to be tremendous word of mouth praise. As long as I'm doing that, I know I can't be disrupted because I am on the bleeding edge, so I'm not going to be asking that.
But then I'm going to say, “Okay, now Wall Street is breathing down my neck, people are breathing down my neck. We need our next chunk of growth. Where is it going to come from? I want to know everyone. Have we ever thought about all we talk about is tearing down and taking on the other guy. We've got big rivals out there. They got a lot of money, they got a lot of expertise. They're not going to lie down and sit there and take that easily. They're going to come back punching at us. So my question is, are there non-disruptive opportunities that are just sitting there right next to us that we could go and start creating for our next chunk of growth?”
So I would be challenging my organization not to disrupt myself, but to make sure I am continuously offering a leap in value that will leave customers breathless when they talk about me. And if I do that, believe me, no one's going to start thinking about disrupting my industry.
Guy Kawasaki:
This may seem like a strange question, but do you think that this dependence, if not obsession with disruption, particularly where I come from in Silicon Valley, everybody's talking about disruption. Do you think it's a male thing? Is it linked to a gender?
Renee Mauborgne:
Oh Guy. I can't say that, but certainly a lot of men talk about it. But when I see women entrepreneurs as well, they talk about it, but I haven't done a study on it. I think you're the best to answer.
So you meet more men than women and what do you see happening there? There is something very macho about it, but that's not our field of study.
So I can't really speak to that. I haven't done that. Now maybe I'll ask my researchers to look into this, but let me back up on that for a minute.
So we teach at INSTEAD, Business School, MBAs from all over the world. And the one thing I do see with the incoming cohort and for the last few years increasingly is students place a lot of value on not only wanting to make money but wanting to do good. And they place a lot of value in believing that they are somehow contributing.
And when we speak of the need to not only destroy and tear down, but to create without assuming we need to take down others, I will say it's very well received. It really speaks to this new generation. It also speaks to the increasing movement of people talking not only shareholders, but let's think about the intersection between business and society. I think it speaks to that as well.
Guy Kawasaki:
So we've been talking about this from more or less the supply side, but what about from the demand side in the sense that I don't think people get up in the morning saying, "God, if only I could buy a disruptive product", nor do I think they get up in the morning saying, "if only I could buy a non-disruptive product".
As your book mentions, don't they just want to white out mistakes and take a photo and see it immediately or be able to select from thousands of movies without driving? So what does this mean from the demand side? Because I don't think people care if it's disruptive or not disruptive, it's just do they want it?
Renee Mauborgne:
Yeah, very critical we talk about that. One of the defining features of whether you're going to unlock a commercially compelling market, whether disruptive or non-disruptive, is if you're achieving value innovation, which is not about bleeding edge technology per se, but you're offering a magnitude of value increase that makes my lives better, whether I'm a business you make my life better, or whether you are a company doing a non-disruptive opportunity for a non-disruptive creation, you have made my life better. And I think that is the key defining feature.
So when we talk about what are the paths, identify a burning but unexplored problem or issue that people are struggling with or that could create a real opportunity for their lives, and that is what people should be able to immediately resonate with when you say, “If I could do this for you”, “Yes, please, yes please, do it. Yes.”
So you're correct. Buyers are not thinking disruptive or non-disruptive. They just want something that makes their life better. That's all takes away one of the hassles or gives them an opportunity that they'd never before imagined they'd have.
Guy Kawasaki:
Now let's suppose that magically with total certainty, a company has a disruptive product. You're not at all suggesting that they should hold themselves back because of these other social concerns. They should still go for it?
Renee Mauborgne:
Yeah, we're not making any judgment on that. There are certain industries that invite disruption. It leads to the more efficient use of capital and resources. So we are not claiming that at all. What we're claiming though is that this obsession with disruption has kept everyone looking only at existing industries and how to tear down and take competition out when there are all these other opportunities as we outline in the book.
And that companies are doing that, are building billion dollar businesses that we're not looking at. And so let's take some attention and start looking here.
Let's expand the horizon of our thinking so we're not missing any possible business opportunities. That's what we're saying. So non-disruptive creation is not attempting to disrupt disruption. Disruption exists, has its value and we're saying there's just this other half and we've paid no attention to it.
And guess what has a lot of benefits organizationally to execute on it. But it has benefits, economic and social because it doesn't lead to shuttered companies, hurt communities or very real social and human costs.
So if I tell a company, “Guess what, I'm going to disrupt your industry.” Every employee that hears that a major company is coming after them, they are going to go home filled with fear because we as consumers like it. But when you're on the opposite side of that and you're on the receiving end and you're in the receiving community, the receiving town, there is a lot of hurt. We don't perceive it, but there's a lot of hurt that goes with it. And we're just saying, do it when you have to, but consider this too.
Guy Kawasaki:
Now, it seems to me that in the disruptive world we have heroes such as Elon Musk and Steve Jobs. Who are my heroes, my role models for non-disruption innovation?
Renee Mauborgne:
So you could say Elon Musk in a way because if you think about what he's trying to do right now. So yes, Tesla is a disruption, he's attempting to disrupt that the auto industry.
But if you look at what he is trying to do is space tourism and life on Mars, which I think is his greatest passion of all. And that's all non-disruptive, what he's trying to do, all of that. So he's balancing both.
For us the hero is the individual. You mentioned the mistake out or liquid paper that was Bette Nesmith and she was a secretary. Power of it is we can all be our own heroes. We don't need only a Steve Jobs or individual person that personifies that.
And I think the book tries to empower people so that we can all see ourselves in the driver's seat of how we can effectuate this kind of new market creation.
Guy Kawasaki:
I had never heard the whiteout story, and that is a great story. The story that everyone hears is of course, Post-Its and Art Fry who we are interviewing soon. But this story of whiteout, can you just tell the story because it just warmed my heart when I read that.
Renee Mauborgne:
Yeah. The simple story was that this woman Bette she was a secretary and we didn't have word processing and all these, you had typewriters in the old days and you type and when you made a mistake on the typewriters, you often had to redo the whole page again if you had a demanding boss, of course. And so secretaries were wasting a lot of time and typing over pages and a very inefficient and frustrating job. You had to be so careful when you're typing.
And she as hobby was a painter. And at the holiday time, she would come and she would paint the bank windows and she started thinking about it…”God, when I'm an artist and I make a mistake, you don't erase it, you paint over it.” So she got the idea, “Let me bring a little white tempera paint into the office and when I make a mistake, just going to dab a touch on the paper and start typing over that so you don't see it.”
And other secretaries started to see it and they started to like that idea and she found a real problem. So you said, “How did we know the market exists?” Bette saw the frustration of all the secretaries and how much time it wasted and how irritating it was.
And so there's my size of my market, lot of people irritated, a lot of frustration. I can do it and then I do it myself. And we always say dream big, but start small and scope it down.
So it's human challenge and let's see what that looks like and then of course roll it out. And that is how that story began. And I think the beauty is, and even in microfinance, I'll go back, we can admire microfinance. That's a non-disruptive industry.
State serves over 140 million people. But who could have ever imagined that somebody earning less than two dollars a day, no regular job, no collateral, nobody with money that could vouch for them could ever get a loan to start a business.
And what bank would ever give a loan for twenty-two cents? It's not worth the paper it's printed on. In fact, they can't even read paper or they're not literate enough to even sign the paper. So it is closed case.
But Grameen Bank starts this. Now a lot of people say, wow, give money. Okay, so you can start that. But these are illiterate people. A lot of them, they've had no formal education. They live in huts, they live on dirt floors.
But what he saw was that they have enormous creativity just to survive. Just to survive and pay for their families. And they have their own skills and crafts that they do, whether it's weaving a mat or making a sweet cake or whatever it is.
To the contrary, they're all little entrepreneurs and he invested in those people and they didn't fail. They have a 98 percent repayment rate. Now why do I say that? Because those are the heroes. We can be heroes like Elon Musk, but I need heroes at all levels.
And that's what the book hopes to inspire. And we start with small stories and we have big stories because right now you look at the challenge. I heard, by the way, a fantastic interview that you did with Ginny Rometty, just terrific. She's a great lady. And you started talking at the very end about AI.
AI right Now when you see it, a lot of people are talking about the large level of the efficiencies and productivity it brings, but maybe a large amount. A potential displacement before new jobs are created at the speed is which displacement can occur.
So if we have displacement that goes much faster than new job creation that goes around those new technologies, we're going to have a lot of released human labor. And maybe my industry that I'm in today as a smaller mid-size company or an existing company might face that. And so I say this because we all need to start thinking about how can we create jobs from the beginning? And this non disruption can be the way because disruption leads to more displacement in the short to medium term.
Guy Kawasaki:
Okay.
Renee Mauborgne:
Roundabout way to answer that question, but it has importance.
Guy Kawasaki:
That's okay.
Renee Mauborgne:
Yeah. Let's go in circles.
Guy Kawasaki:
Are you bullish or bearish on crypto?
Renee Mauborgne:
It's not part of our research. I would say I see great strength in Bitcoin. I haven't done enough study on crypto, but I would say Bitcoin is also different than crypto. Because it is truly a decentralized ledger, not controlled by anyone.
Guy Kawasaki:
I think that a story that you might use to illustrate the difference between disruptive and non-disruptive innovation and the sort of goodness of non-disruptive is I would make the case that crypto in general is a very disruptive innovation and it is trying to destroy finance as we know it. On the other hand, as you mentioned, microfinance is not disruptive and it is not trying to destroy things. It is trying to build things.
So I think that is a great juxtaposition of you want to be a crypto millennial bro, or do you want to be helping 180 million people with microfinance? That's the difference between disruptive and non-disruptive finance.
Renee Mauborgne:
I think that's an excellent point. And I guess from the perspective of the financial service industry, as we talked about when you started the interview, you said to me, if people see a really disruptive opportunity, should they not go for it?
And so the question becomes from their perspective, do they think the current financial industry leaves a lot of existing pain and costs available? And I will say that I think that when people see that given the speed of movement, of course we're purporting non-disruptive. We are showing that's another way as you just said for microfinance.
But I think to your point, and you actually made that point in the very beginning, when people see an industry they feel has a lot of inefficiencies or difficulties or whatever it may be, people are going to look to disrupt it. Now I can't speak for that because we're not studying that industry in particular.
Guy Kawasaki:
Okay. One of my friends is a professor at the University of Chicago named Dan Simons and he has a new book out that I highly recommend you read. You will love it. And basically he breaks down the world into a 2x2 matrix. And we'll use a semi facetious example. So let's say in a 2x2 matrix you have black mock turtleneck, no black mock turtleneck.
And then you have on the vertical axis, successful, not successful. And the world seems to focus on the successful black mock turtleneck wear, which is Steve Jobs. The non-successful black mock turtleneck wear is Elizabeth Holmes.
But nobody ever thinks about all the people who wear black mock turtlenecks and are not successful and the people who don't wear black mock turtlenecks who are successful. So his point is that we only hear about the Zuckerbergs and the Jobs and the Gates who don't graduate college, but there are many people who don't graduate college who are not successful.
And there are many people who graduate from college who are successful. And I think that is a great analysis for your work because there are a lot of people who do non-disruptive technology who are very successful. It's just that we only hear about Tesla and Apple, not that they don't exist as successful non-disruptive technology.
Renee Mauborgne:
Thank you very much for saying that. And that is correct. And so in the book we tried to provide that blend. It's our attempt, so people can see themselves in the stories and recognize that we can all do that at different levels. So yeah, I would concur very much and thanks for sharing that with me. I'll go check out that book.
Guy Kawasaki:
We're going down a rabbit hole in a sense. So when I read that book, one of his points is a lot of business books and self-help gurus and influencers, they're always pedaling like banal things. “If you believe in yourself, you can do anything.”
Nobody ever looks at the people who believed themselves and didn't do anything. And also nobody ever looks at the square where you don't believe in yourself, but you did do something.
So anyway, when I read his book, I said, "Shit Dan, are you basically saying that I'm full of shit and that all my recommendations are not scientifically valid and I'm leaving all these other cases unsaid and I'm doing a disservice"? And the answer is a little bit yes, I had an existential crisis there for a few days.
Renee Mauborgne:
I can see why you're saying that. I think for us, what's always motivated our research that always we started, can this idea that we are seeing beginning to see in the data make a difference? That would be some form of positive contribution, whether small or big the world gets to judge.
And if so, then how can we learn to understand it better and try to get a little bit more systematic at it, de-codify it to some extent, because if something is worthwhile, we may tumble and trip along the journey, but it's a worthwhile journey and it's a journey we should go on.
And I think that has been our perspective and or we're hoping with the book of non-disruptive creation is we're laying out a case that there is this other universe where you can create without displacing and destroying and here is a way for you to get a handle on it to begin to move in that more systematically.
There is no guarantee in life for anything, any path to success, but it doesn't mean we shouldn't be increasingly trying to understand that and look to that to improve our odds of getting there.
Guy Kawasaki:
I don't think that you should have a similar existential crisis as me because for two reasons. First, you are really a researcher. You're really pedaling science. I'm not. And secondly, I would say that you are exposing a corner of the 2x2 matrix that is unexplored.
So in fact, you are bringing to light the corner of non-disruptive successful business that very few people have heard of. So you're doing the world a service by making sure they understand that “Hey, there is another viable path. Don't just try to be Tesla and Apple. There are other ways to do this.”
Renee Mauborgne:
Thank you. And you articulated better than I could there. That is what our intent was in doing that. And when you read the stories and you see it's very inspiring. So it's not only practical, but it's inspiring.
Guy Kawasaki:
If podcasting doesn't work out, I'll work as a book publicist for you. Okay?
Renee Mauborgne:
Listen, we'll take that, we'll take right away. But I think your podcasting is working out.
Guy Kawasaki:
I want to return to the White Out and Post-its examples for a second and they to me represent different paths to products. So with Post-its, it was, huh, we invented something, we don't know what to do with it. With White Out, it's I invented something because I know exactly what to do with it, which is the more efficient, better, more successful path is it “Build it and they will come” or “I'm already here, I know if I build it, they will be here.”
Renee Mauborgne:
In 3M's case, they have these huge R&D labs and so part of their science and their researchers are just creating new technologies and things that's just pure R&D, not necessarily commercialization. They hope for it. And Spencer Silver created a non-adhesive adhesive, it didn't make any sense, non-adhesive adhesive.
And actually just sat in the shelves for a long time and it was actually Art Fry whose notes, his hymn notes in this church kept falling out and he had heard about this and he thought, oh my God, there's this opportunity.
So it can go in both directions, but what I would say is in large corporations, they're always going to have R&D units that are really based on science, technology, getting peer reviewed papers and things, not necessarily turning that into a commercial opportunity.
If I'm in charge of the commercial opportunity side of R&D, I am definitely starting with the problems in the marketplace, but from the pure science point of view, that is not always what is happening.
So Xerox PARC, they were just creating the most amazing things they could. They were not thinking about commercialization. Of course Steve Jobs went in, he saw how that could be commercialized and he was able to hatch the egg that they had laid in a sense.
But it can go in both ways, but to be systematic, so if I had a big R&D department, I know I would want everyone in the commercial department to really understand what are all the creations we have sitting in that lab that are things we could pull on if we saw a need in the marketplace, an unexplored problem or an emerging problem or opportunity that we could use to unlock that? That's what I would want.
But I'm not necessarily certain, and I'm not sure your R&D research scientists will like it if those that think they're there to do bleeding edge technology to advance the human kind of knowledge are suddenly told only think that might not go down so well with part of your R&D unit if you have a huge as 3M does.
Guy Kawasaki:
Do you think that when you successfully create a non-disruptive innovation and not only have you created it, but you market it and it is selling well and doing well, et cetera, et cetera, does that inevitably lead to disruption of what was formally a non-disruptive market... like someday is Warby Parker in Sight for Sore Eyes is going to be duking it out for eyeglasses in India because somebody non-disruptive created a market for eyeglasses in India.
Renee Mauborgne:
That is the reality of life. A new market is non-disruptive over time. A lot of players may come into that non-disruptive new market. Usually a new market can handle more than one player. But then eventually over time as it grows and it evolves, maybe eventually it starts to have people that come in that start to try to disrupt it or dominate it.
There is no permanent excellence unfortunately. But if an industry can last for ten or fifteen years, pretty non-disruptive, I would say that's a pretty good leeway that we can expect. But no permanent excellence. It is a moving trajectory in life and in business.
Guy Kawasaki:
So suppose I'm listening to this and I'm an entrepreneur and you've removed the scales from my eyes and now I understand it's not only, okay, it's good that I have a product for a non-disruptive market, non-disruptive technology, but then I'm wondering, can I go to Sandhill Road? Can I go to Sequoia and Accel and all these VCs and stand up and say, all right, so I have a non-disruptive technology here and I want you fund it. You think that's going to work? Not that's exactly what you'd say. But do you think the investment community has an appetite for something like this?
Renee Mauborgne:
I think that's a great question to ask. I think what you'd need to do, and we try to do that in the second part of the book, is to show how big the market is, how many people are struggling with this, how that comes in to alleviate that pain or create that opportunity that no one has ever done. I'd probably try to bring in some kind of data that's going to show it itself.
If you go back to Post-Its the first time they did a market study, no one really cared for the product, it's because they didn't get to sample it. So then they went back and they said, no, let's do a sampling blitz. And then the second people had their hand on it, people fell in love with that product. You just had to use it once and you fell in love with it.
So I think that you're going to need to think, we try to talk about the end of the book is how are you going to articulate that to the investment community and maybe a guy help us out there, get our book to all the hands of the VCs. And it's interesting, they're coming to us because a VC just talked to me last week and she's in the VC that deals really in the green environmental space. And she said, it's interesting because our book has some non-disruptive green energy cases in it.
And she said, gosh, when I look at it, everything that comes across our desk is just saying disruption. That's what we're doing. And so I think it's going to need a change in the dialogue, but if I can prove the compelling value in what I'm doing and I can show how many people are struggling with it and then I can get creative of how I show the testimony for that, I think there begins to be a possibility. Yes. So you raised a good point on that one, but I always believe there's a way forward.
Guy Kawasaki:
I think that the key will be that you can rattle off two or three non-disruptive successes.
Renee Mauborgne:
Correct.
Guy Kawasaki:
I'll tell you a funny story. So when I was in the Macintosh division, and this is 1983-84, and whenever we met with press and analysts, they always asked us which Fortune 500 or Fortune 1000 organization is using Macintoshes? And the truth was there was only one, it was Peat Marwick, the accounting company.
So we'd always kind of hem and haw and stall and as if we're thinking about which one to mention to you because there's so many to choose from. And then at the end of this ten or fifteen second delay, we'd say, “There's Peat Marwick for example, and they're giving a Macintosh to all their onsite auditors so that they can crank spreadsheets on site as opposed to having to come back to the office and do it.”
And I'll just tell you that Peat Marwick was the only large company who was buying Macintoshes. And the moral of that story is everybody needs a Peat Marwick to start and you only need one. So you just need one, Renee.
Renee Mauborgne:
I think Guy, what you're saying is really compelling and I think to your point, we start, we think that you need to disrupt and then you give the non-disruptive cases, but I also think it's going to change a little now as money is not so cheap and so easy that you can just throw money at things, I think the investors are going to get a lot more stringent about how they're thinking about different rubrics.
But I agree with you on that case to mention, look what they did and look what they did. Why do we only think this? And in fact, I don't even have to take on the big guys to do this because they don't sit there lying down. That's why MoviePass got squashed by AMC. But most failure cases get squashed and people try to keep it silent, but there are others.
So I agree with what you're saying. I think that's brilliant. So there goes back, I say, yeah, we do need you.
Guy Kawasaki:
Again going down a deep hole. Have you had any kind of issues because you picked the colors red and blue, where blue is this wide open opportunity and red is this doggy dog, brutal world. Has that like unexpectedly now when in political red and blue discussions, have you taken any heat because of the colors you've assigned to conditions?
Renee Mauborgne:
Thank you for saying that. But no, we have never, we have not had that. I think we haven't seen a difference. It's just embraced. Blue is open, we attached it to the ocean, which everyone knows is blue. And red is tough. So we haven't had that.
No politics in either of one of our books, actually. You know what we're excited about though? And there is contention and some people say you can either be a tree hugger or you could be a corporate raider.
But why we're passionate about non-disruptive creation is because it allows you actually to not only open up these billion dollar markets if that's your ambition, but it allows you to do it without more displacement of companies in employees and hurt communities. And so in that sense, it allows you to achieve economic and social good, not in how you spend money, not as a cost function, but in the very way you make money. And to be honest with you, that speaks to both sides of the aisle.
There's a middle path where we don't have to always assume it has to be A or B, it's either or. And what non-disruptive shows is it can be and and. I can do good for economics and business without sacrificing my costs and being crimped and asking me to sacrifice my profits. And that for us is that middle path which we're hoping can bring people together instead of dividing us. And we need both. We need both.
Guy Kawasaki:
Amen. Amen. I should have asked this at the very beginning, but because people may be wondering, so could you explain the difference between blue ocean and non-disruptive?
Renee Mauborgne:
Yeah, so blue oceans is a strategy concept obviously. So it's more than just the new market. It's about aligning people and their value proposition, their profit proposition, and how do you motivate your people. So that's all part of it.
But blue oceans occur across existing industries. So you take Cirque du Soleil across theater and across circus industry, takes a margin of share from both and then creates new demand. So I don't disrupt and destroy an industry, but I do take some, so some disruptive growth, some non-disruptive. So it's across existing industries.
Non-disruptive creation, that's what came out of our research because people had asked us, Guy. “So you created this, you said there's competing and creating, okay, good in strategy, but isn't creating innovating. And if it's innovating, isn't it disruption? Isn't it creative destruction? Isn't it just the same word?”
And so we looked at our data and we found actually almost no cases in our database where within an existing industry that displaces, yes, Apple was there. Novo Nordisk, their insulin pen, but most are, all of them are across industries.
And non-disruptive is when you create a brand new market outside of an existing industry. So there is no displacement at all. It's an only non or significantly non-disruptive growth. And that is the difference. So blue ocean, so you can think of there's three types of market creation really at the macro meta level. There's disruption, I strike at the core of an existing market with the attempt to displace the industry.
Then there is blue oceans which occur across existing industries, take a share of different industries. But I also bring in a lot of new demand. Southwest Airlines, part bus, part airline, new market, airlines still exist, buses still exist, and Southwest is very smack in the middle.
And then on the other hand, non-disruptive are all these industries outside. And this greatly intrigued us because from the field of innovation, ever since Joseph Schumpeter, we've always assumed. To create, you must destroy. Creation comes with disruption. We said, no, you can disentangle market creation from market disruption by pursuing a different path. And that's why we put our just for the second book in that.
Guy Kawasaki:
My last question for you Renee, you think my friend Clayton Christensen is listening to all this and turning over in his grave? Or do you think he's saying “Finally someone has figured out it's not just the innovator's dilemma, it is that there can be non-disruptive success?”
Renee Mauborgne:
I really can't speak for a human being, of course, especially someone is no longer with us. I can only say we have respect for him. But I think he was always a broad thinker and I think he would be open to another idea. You know what we are always thinking about and I just go back is we're just always thinking is this issue important and could it maybe make a difference?
And if it is, it's a worthwhile one and we're going to try to do it. And I think we are always looking for less zero sum.
There's a theory, always that everything must be zero sum, it comes from war. Because for me to gain more land, it can Earth is limited, the only way I can gain more land is if you lose. So from military history moved up to strategy that there's a fixed existing industry. So my gain is your loss, we always assume. But reality, if you look at the world in business, it's not fixed.
It's ever expanding the level of industries. And so the assumption that we take from more of zero sum that's translated all the way up, we see that may exist in land, in physical terrain, but not in the world of ideas and imagination. And so it's more positive sum, and that's where we're going to put our emphasis. So I hope trying to make a step in that direction.
Guy Kawasaki:
I knew Clayton and if I had to guess, I would say that he would say that this is a very interesting and positive concept. And in fact it is an alternate answer to the traditional answer of the innovators dilemma. The innovators dilemma is usually answered by you just got to keep out innovating and keep disrupting or you will be disruptive.
But I think Clayton would say, here's another path. You don't always have to be disrupting. You can also be non-disruptive and serve new markets or serve markets that have not been served before. So I think he would love it.
Renee Mauborgne:
Well thank you for that. And one thing I would say though, we talk about the four organizational advantages to non-disruptive creation. And one is as an incumbent, if you get attacked, the point is that you don't have to meet always confrontation with confrontation. Disruption isn't the only way to respond to disruption.
There's also non-disruptive. And we give the example of how historically there were ocean liners that took people across the ocean from Europe to the US and that was a dominant way. And then the Jet Airlines start, Jet Airlines comes, they're faster, they're flexible, I forgot they're more efficient and they're just about to kill ocean liners.
So Cunard sees this happening because they were the most dominant, they were the biggest player in the ocean liner industry. And at first it thinks two can play at this game, not one. And so it goes and buys an airline and it becomes Cunard Eagle.
But the existing jet players, they say, “Wait a minute, we don't like that. We don't want two in this industry.”
So they go and get it, so their license gets revoked from flying the Europe US route. And they said, but as a small bone, we'll throw the dog a bone and you can go to, I forgot whether it was Caribbean or some area you could fly, but it was not a big route.
So Cunard is stuck there and they're thinking it's only a matter of time, the people are switching so fast to jets, we got to do something. And that's when they said, “Wait a minute, let is reconceive.” They didn't have the notion of non-disruptive, but they said, “Let us reconceive, why do we have to think of a cruise as getting us from point A to point B? Why can't the cruise itself be the end and we turn it into this whole vacation at sea and do that?”
So it responded to disruption with non-disruptive. All the other ocean liners that tried to respond to disruption are long gone. And of course now today they're part of Carnival Cruise lines, but they opened up this huge non-disruptive industry that was there. So yes, when you're hit by disruption, it can be also a very effective path. One punch doesn't need necessarily another punch, especially when the punch they're throwing it exceeds on two or three value dimensions.
So it's not just speed, it's frequency, it's ease. When they're exceeding on three or four dimensions, you need to start thinking something else. So non-disruptive opens that opportunity. We also talk about in the book the case of a post office in France, they're killed by text and email postage is down, mail by 50 percent and still dropping.
So what do you do with all these post people? What do you do with them?
They found out in France the second most trusted people in public services or in people encounters, their baker that they see every day in France for their baguette. And the mailman that comes to their door, especially in the villages. And the problem is that there's a lot of old French families that live in the countryside. There are modern children, work in the cities, they're busy, they've got their kids, they never visit them and they lack human connection. And they said, can we not start a service where the post office, can go in once a week to check up on peoples parents, have a conversation, find out if they have a problem in their home, do they need something, just some human context, some dialogue. And then they let their kids know and they have a dialogue for it, for I think it's forty euros a month. And so a non-disruptive response to text and to email.
So yes, thank you for that, allowing me to segue into that. But those are the type of opportunities that when we open our mind and start thinking non-disruptive, we can start seeing that if we only think disruption, we very well may be blinded to.
Guy Kawasaki:
That is a great example. I would've used it with my parents, and soon my kids will be wanting to use it with me, much more than a Eufy camera on my bedroom or bathrooms.
And that's a wrap for our insightful conversation with Renee Mauborgne. I hope you enjoyed listening and gained valuable insights into multiple kinds of innovation and change.
Don't forget to check out Renee's new book Beyond Disruption: Innovate and Achieve Growth without Displacing Industries, Companies, or Jobs. I'm Guy Kawasaki. This is Remarkable People.
My thanks to the Remarkable People team. That would include Jeff Sieh, Peg Fitzpatrick, Shannon Hernandez, Louis Magana, Alexis Nishimura, and the blue ocean drop in queen Madisun Nuismer. Until next week. Mahalo and aloha.