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Getting started (June)
Writer:Marilyn Sinclair

Breaking the mould Why not all great innovations are market successes.

We live in a world where every innovation is positioned as the next big thing. Disruptive innovations, the kind that hacks industries, are all around us. Uber and Airbnb are the most popular examples, but the resurgence of virtual reality and the rise of self-driving vehicle development are hard on their heels. Disruptive innovation is not a new concept. It’s been a part of business lexicon since the mid-’90s, coined by Harvard professor Clayton Christensen before he wrote The Innovator’s Dilemma. While creative disruption or disruptive innovation continues to be popular among new and serial entrepreneurs, not all breakthroughs are valuable to the end user in a truly transformative way. 

True disruption requires the right combination of factors, including a revolution in experience or interface; better or more efficient links to everything from our social networks to our money to the products we love; and of course, lower risk and cost. The other hallmark of successful disruptors is that they aren’t necessarily designed to co-opt an existing audience, but to create a new one within an established sector or niche. Perhaps the greatest challenge to a truly valuable, disruptive innovation these days is to cut through the almost overwhelming market noise and skepticism. 

That means big investments in consumer research and education. But efforts to thaw that skepticism can get help from seemingly unlikely places. In Canada’s banking sector, for example, many leaders are signaling they have no intention of going the way of Kodak or Blockbuster as financial technologies (“fintech”) and renewed focus on the customer experience begin to disrupt their industry. A recent PricewaterhouseCoopers study found 84 per cent of banking and capital markets chief executives surveyed believe fintech will “completely reshape” or “have a significant impact” on competition in their industry over the next five years. With 65 per cent also citing “changing consumer behaviour” as an industry threat, PwC detects an increasing appetite among the big six banks to collaborate with fintech rivals. 

Wealthsimple, the two-year-old Canadian online investment startup, announced in May it had met its goal of $1 billion in assets under management by year’s end, up from $400,000 in 2015. Relevant to consumer profit, efficiency and experience, Wealthsimple combines robo-investing with live advisers and offers daily monitoring and real-time rebalancing as needed, all with no account minimum, no transaction charges, and annual fees of just 0.35 per cent to 0.5 per cent. Still, as one early investor acknowledged, Wealthsimple will have to keep fighting the “you get what you pay for” mentality of most consumers — no small hurdle given Canadians have traditionally paid some of the world’s highest investment fees. While every disruption in history needed to actually be better, not just innovative, to survive, today, they also must be strategically positioned that way, in the right place for a very specific audience. Clearly explaining the value of an innovative product or service is a challenge, but doing it in a way that gets attention is the even tougher task facing entrepreneurs, and the mentors and investors who support them.