Yes, Clayton Christensen is right: Innovation is the answer.

In the fast-changing and hypercompetitive 21st-century global business environment, the best led, managed, and future thinking organizations constantly scan the external business environment for several purposes. From this author’s perspective, an organization’s ability to detect if its industry is about to and/or undergoing disruption would strongly influence its long-run survival. According to the Clayton Christenson institute, “Disruptive Innovations are NOT breakthrough technologies that make good products better; rather they are innovations that make products and services more accessible and affordable, thereby making them available to a larger population.” (Christensen Institute, n.d.) Consequently, Tesla and Uber, may be deemed “breakthrough innovations” but should not be regarded as disruptive innovations. Now, getting back to the question of what are the indicators, questions, or checkmarks a company can investigate to determine a game-changing innovation(s) may/will disrupt its industry?
There are several indicators/questions, but the four relevant/critical ones are 1) does the invention meet a fundamental need? 2) is it less expensive/affordable and more accessible? 3) is the invention easy to use? 4) to drive adoption of the invention, is the right ecosystem in place?

Suppose your business operates in either the auto (e.g. internal combustion engine vs hybrid vs electric), banking (e.g. traditional banks vs fintech), entertainment (e.g. cable vs streaming vs satellite), manufacturing (e.g. traditional vs agile vs additive) to name only four. In that case, you probably know or have heard about disruptive innovation; why? Because your industry may have already been disrupted or prone to disruption owing to selective iterations of existing, emergent, or future innovations, including but not limited to radical/breakthrough, architectural, accelerated, modular, and Clayton Christensen’s disruptive innovation. Does it mean that every traditional incumbent is at risk of being disrupted by some small, obscure, under-resourced company or another traditional incumbent? Not if you, the disruption threatened traditional incumbent is Dow Corning whose forward-thinking, proactive, agile, and adaptive approach enabled it to escape turmoil by becoming the disruptor. And thus effectively thwarted the challenges posed by its relatively small low-cost rivals and/or large supplier rivals in the standard silicones business.

Dow Corning was known for its innovative high-quality products supported by best-in-class service offerings for which customers paid premium prices. However, in the late 1990s, commoditization of the standard silicon business presented existential threats to the company’s core business which had slowed dramatically. Confronted with declining performance resulting from 1) customer defections to smaller local suppliers, 2) improved operating efficiencies of global and local rivals to undercut their standard silicon products business, how did the company respond? Well, Dow Corning embraced and applied the theory of disruptive innovation and technological leadership to develop high-quality standard silicon products that were competitively priced and successfully engineered a turnaround in the company’s fortune.

The theory of disruptive innovation introduced circa 30 years ago by Harvard Business School’s Professor Clayton Christensen is a powerful tool for predicting when an industry is ripe for or susceptible to disruption and which entrants are likely to be successful disruptors. It is a theory that attempts to explain innovation-driven growth and has been touted as a springboard for growth by large and small entrepreneurial entities such as Dow Corning, Intel, etc. Disruptive innovation is largely misunderstood and has been widely used to describe the process wherein successful incumbents stumbled by relatively new innovation-driven entrants.
Disruptive innovation is not necessarily about extracting gains from first-mover advantage. In the business sense, disruption is the process in which a resources deficient entity [generally a “tiny” company] successfully challenges its larger traditional incumbent(s). These disruptors succeed by initially seeking out and meeting the needs of the underserved/fringe/overlooked customers and the products offered initially are deemed inferior by most of the incumbent’s customers. In other words, the lower price is not sufficient to get mainstream buyers to switch. As the disruptors then offer the successive iterations of products with rising quality enough to satisfy these mainstream customers of the traditional incumbents, these customers will be happy and content to buy the products at lower prices. This is fundamentally how disruptive innovation unfolds and how it forces prices lower so that more of a nation’s population can afford the products they need to enrich their lives.

1965 Toyota Corolla: This is disruptive innovation 2021 Lucid Air: This is not disruptive innovation

Higher/better Quality, Affordable/lower Prices, and Rapid/faster innovation: A paradox in the 21st century’s global business environment.

Long before the recent upheaval in the global economy wrought by the coronavirus pandemic, future-thinking companies had been tweaking their business models and competitive strategies. Why? to meet the not-so “impossible” demand of producing better/higher quality products, offering them at relatively affordable/lower prices, and innovating quickly/faster to satisfy rapidly changing consumer tastes and preferences. Engineers are used to being tasked to respond to the challenges of producing complex/sophisticated designs under consistent pressure to reduce costs and improve quality in a fast-paced environment. Now, add in the urgency to innovate quickly and fast to market the new and/or improved product(s), and one can guess why even a future-thinking business leader might sleep like a baby (wake up every two hours crying). 

TMCG’s thinking is constrained to the third decade of the 21st century, considering the rapidly changing technological advancement landscape and TMCG’s expectations that the fourth industrial revolution (4IR) will usher in a new era of economic disruption. Certain of today’s high-profile technologies, processes, and systems such Robotics-AI, additive manufacturing (3D printing), mass customization, Digital Twin,  simulation-driven design for manufacturing (SDfM)generative design, etc. might degenerate into “dogs” or “question marks” by the end of this decade, if I may borrow these BCG Growth-Share matrix terms. This paradox/phenomenon seems to blend Clayton Christensen’s disruptive innovation, agile manufacturing, adaptability, and sustainability into perhaps a not-so “new concept” for creating competitive advantage and/or strategy in this third decade of the 21st century. 

Anecdotal evidence suggests that many/some global MNEs can and have maximized the utility of and leveraged the paradox to introduce new products into international markets and capture market share from their less agile peers.

The vast majority of SMEs do/may not possess the organizational resources and capabilities of their larger brethren. Albeit innovation-driven and agile operators, most SMEs may be challenged to be paradox/new economy pathology compliant. That said, all hope is not lost. Why? SMEs can partner with capable manufacturing services providers or other unique third-party entities like Xometry  (xometry.com) to meet their on-demand manufacturing needs. 

Tenarries MCG: Disclaimer

TMCG has no relationship with Xometry, and we are not recommending the stock for investment purposes. All investors are advised to conduct their own independent research into Xometry stock before making a purchase decision. In addition, investors are advised that past stock performance is no guarantee of future price appreciation. 

ASEAN-5 RISING


“The Association of Southeast Asian Nations, or ASEAN, was formed on 8 August 1967 in Bangkok, Thailand, with the signing of the ASEAN Declaration (Bangkok Declaration) by the Founding Fathers of ASEAN, namely Indonesia, Malaysia, Philippines, Singapore, and Thailand. Brunei Darussalam then joined on 7 January 1984, Viet Nam on 28 July 1995, Lao PDR and Myanmar on 23 July 1997, and Cambodia on 30 April 1999, making up what is today the ten Member States of ASEAN.” (ASEAN.ORG, 2021). ASEAN is an international organization/regional bloc formed to promote political and economic cooperation and regional stability.

Growth and profit-seeking organizations worldwide are challenged to determine which international markets to enter and which optimal marketing strategies to implement to achieve the corporate objectives. Our research has uncovered apparent and hidden opportunities in ASEAN but especially the ASEAN-5 economies. Today, the ten-member ASEAN trade bloc is a 667 million regional solid grouping estimated to record a nominal GDP of circa $3.36trillion (IMF, 2021). The bloc’s diversity boasts many languages, religions, and cross-country differences may be a double-edged sword that promotes or moderates political and economic cooperation and regional stability. Our perspective favors the former. This insight presents the long-term view of the “ASEAN-5 tiger countries of Southeast Asia” market attractiveness considering the potential changes to the global economic order by 2050. We hope this insight will help organizations, especially SMEs, find new market opportunities and create new sources of competitive advantage through improved ASEAN-5 global competitiveness.

This note focuses on ASEAN-5 (Indonesia, Malaysia, Philippines, Thailand, and Vietnam), ASEAN-6 (the six-tiger countries of Southeast Asia), excluding Singapore. ASEAN-5 is the largest economy in the ASEAN trade bloc. Although the Singapore GDP ($374bil at current prices) is 5% larger than that of Vietnam ($354bil at current prices), it is deliberately excluded from the discussion owing to its relatively smaller demand/market size (5.8 mil population). The population of Vietnam is 98 mil. Demand/market size is just one dimension, albeit a critical industry/market level determinant of foreign market attractiveness/potential, which subsequently influences entry mode choice in a firm’s internationalization strategy.

ASEAN-5 GDP growth is forecast to eclipse those of standalone China, emerging and developing Asia (30 countries including China and India, ASEAN, etc), world GDP growth, and every region of the world save standalone India and Sub-Sahara Africa for the 2021-2026 forecast regime (IMF, 2021).