The business world is a fast-paced environment fueled by new technologies, changing consumer tastes, and other forces. To react to these changes, business leaders need to keep their fingers on the pulse of the market to identify opportunities for innovation and mitigate potential threats.

To create an environment that encourages creative thinking and new ideas, founders, CEOs, managers, and team members at all levels can take steps to foster innovation in the workplace and create long-term success for their business.

The Importance of Innovation in Business

In general terms, innovation in business is the process of generating new ideas or approaching existing products, services, business models, and concepts in new ways.

Being open to creativity and willing to innovate upon existing processes is critical to adapting to the ever-changing demands of the market and often facilitates substantial opportunities for growth. Businesses that are resistant to change can quickly find themselves obsolete and struggling to maintain market share.

There are many types of innovation frameworks that businesses use to guide their efforts. Perhaps the most opportunistic theory of innovation is rooted in the concept of disruption.

While it may seem that the world has experienced more than its fair share of disruption, it’s important to understand disruptive innovation so you can view it as an opportunity, rather than a threat.

What Is Disruptive Innovation?

Disruption is a key driver of change for organizations of all sizes and industries. According to a recent study by Accenture, 63 percent of companies are undergoing disruption, and 44 percent are highly susceptible to it in the future.

As described by Harvard Business School Professor Clayton Christensen, who teaches the online course Disruptive Strategy, disruptive innovation is a process by which a smaller company with fewer resources is able to successfully challenge well-established organizations.

While incumbent businesses focus on improving products and services for their most demanding, profitable customers, newcomers to the market can capitalize on opportunities to target overlooked consumers. Over time, the younger, nimbler firms improve their products and services, eventually moving from fringe to mainstream adoption, and directly competing with industry leaders.

For businesses willing to embrace disruption and organize for innovation, there can be significant payoff. Research by Forbes shows that 83 percent of executives who see their organizations as market disruptors report increased revenue. Not only that, but 72 percent of high-performing firms with cultures that promote constant transformation see greater customer satisfaction as a result of employing disruptive technologies.

If you’re aiming to help your organization craft a winning strategy and grow as your industry evolves, here are three ways you can foster disruptive ideas and innovation in your team.

How to Encourage Innovation in the Workplace

1. Focus on Jobs to Be Done

Tens of thousands of new consumer products are launched each year, yet 95 percent of them fail.

To avoid becoming another statistic, encourage your team to pursue new and creative ideas by focusing on problems that need to be solved, rather than market attributes that may motivate customers to buy your products, such as age, gender, or income. This idea is known as the “jobs to be done” theory, conceived by Christensen.

According to Christensen, consumers don’t really buy products—they “hire” them to do a job. By approaching work with this lens, your team can ensure that their innovative pursuits are geared toward what your customers truly require.

“If you understand the experiences you need to provide customers, that tells you what you need to integrate and how you have to integrate it in order to provide experiences to get the job done,” Christensen says in an interview with Working Knowledge. “Delivering experiences is done by having a process that delivers those results. You have to organize your company around processes that get the job done, that provide customers the experiences they need.”

Related: 3 Keys to Understanding Jobs to Be Done

2. Create Space for Innovation

Fostering innovation often requires different resources and processes than those that are traditionally employed within a firm. As Christensen notes in Disruptive Strategy, an organization cannot disrupt itself. To drive your team’s creative work, establish a standalone space where ideas can be tested and refined.

In a recent survey by EY, innovation executives emphasized the need to remove institutional obstacles by creating a disruption unit separate from the main organization. They noted that the unit should still interact with the rest of the company, so sustaining innovations that improve existing products can be integrated into the core business.

By setting up a dedicated space for disruption, your team can focus on developing new products and services that don’t conform to an existing business model.

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3. Embrace Experimentation and Risk

Driving disruption takes more than a shift in organizational structure. It requires a culture that embraces experimentation and risk-taking, and encourages team members to learn from failures.

Research by McKinsey shows that 94 percent of senior executives believe people and corporate culture are the most important drivers of innovation. And in a recent survey of global institutional investors, 67 percent said companies should undertake potentially disruptive projects that may be risky and not deliver short-term results.

In leading your team, stress that failure is an important step to advancement. Strive to create a collaborative environment in which work is transparent, and employees feel empowered to share ideas and feedback with colleagues.

Long-term success often comes with setbacks. Through adopting this mindset, you can help your team reach its full, disruptive potential.

Related: 4 Keys to Understanding Clayton Christensen's Theory of Disruptive Innovation

Harnessing the Power of Disruptive Innovation

Disruption is a process—it doesn’t happen overnight. By equipping your team members with the tools and resources to explore their innovative ideas, you can help your organization stay ahead of the curve and thrive in the face of radical change.

Do you want to position your company for growth as your industry evolves? Explore our six-week online course Disruptive Strategy, and learn how you can acquire the skills and techniques needed to organize for innovation and craft winning strategies.

(This post was updated on May 8, 2020. It was originally published on May 30, 2019.)

Matt Gavin

About the Author

Matt Gavin is a member of the marketing team at Harvard Business School Online. Prior to returning to his home state of Massachusetts and joining HBS Online, he lived in North Carolina, where he held roles in news and content marketing. He has a background in video production and previously worked on several documentary films for Boston’s PBS station, WGBH. In his spare time, he enjoys running, exploring New England, and spending time with his family.