Here is an excerpt from an article written by W. Chan Kim and Renée Mauborgne for the McKinsey Quarterly, published by McKinsey & Company. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.
Illuastration Credit: Claire Droppert
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The era of international travel began in the mid-19th century, with the golden age of transatlantic ocean-going. The British company Cunard, a leader in the industry, transported millions of immigrants from Europe to the United States around the turn of the 20th century. By the end of World War II it had emerged as the largest Atlantic passenger line, operating 12 ships to the United States and Canada as it captured the flourishing North Atlantic travel market in the first postwar decade.
That golden age came to an end with the advent of commercial jet flights. Whereas one million passengers crossed the Atlantic by boat in 1957, air travel caused that figure to fall to 650,000 by 1965, with roughly six people flying for each passenger going by sea. Ocean liners simply could not match the speed and convenience of jet planes.
But while other oceangoing companies were destroyed by the advent of the jet age, Cunard innovated “luxury vacationing at sea” and opened up the modern cruise industry. Until then ocean liners, like airplanes, had been viewed principally as a mode of transportation from point A to point B. Cunard changed that by making them platforms for recreation and star-studded entertainment.
Today Cunard is part of Carnival Corporation, and the cruise tourism industry it pioneered some 60 years ago generates revenues of about $30 billion annually and has created more than a million jobs. The creation of the cruise industry was clearly not incremental. Nor was it disruptive—the catchword that has come to dominate the innovation space. On the contrary, cruise tourism did not invade, destroy, or displace any existing market or industry. It was created without disruption.
An Alternative Path to Innovation and Growth
For the past 20 years “disruption” has been a leading battle cry in business: Disrupt this. Disrupt that. Disrupt or die. Whether it comes from the low end—the basis of Clay Christensen’s theory of disruptive innovation—or from the high end, the way commercial jet travel overtook ocean liners and Apple’s iPhone dominated mobile phones, corporate leaders have continually been told that the only way to innovate and grow is to disrupt their industries or even their own companies. Not surprisingly, many have come to see “disruption” as a near-synonym for “innovation.”
But the obsession with disruption obscures an important truth: Market-creating innovation isn’t always disruptive. Disruption may be what people talk about. It’s certainly important, and it’s all around us. But as our research and the case of Cunard reveal, it’s only one end of what we think of as the spectrum of market-creating innovation. On the other end is what we have come to call nondisruptive creation, through which new industries, new jobs, and profitable growth come into being without destroying existing companies or jobs.
Under disruption and its conceptual antecedent, Joseph Schumpeter’s “creative destruction,” market creation is inextricably linked to destruction or displacement. But nondisruptive creation breaks that link. It reveals an immense potential to establish markets where none existed before and, in doing so, to foster economic growth in a way that enables business and society to thrive together. In this article we will show how nondisruptive creation can complement disruption by offering an alternative path to market-creating innovation. We’ll begin with the significant impact it can have on growth, jobs, and society.
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As we seek to address the many challenges facing our planet and humanity, we will need innovative market-creating solutions. If they can be nondisruptive rather than disruptive, we believe, they will help bridge the gap between business and society, bringing people together rather than dividing them.
Much of business is about aggression and fear: beating the competition, stealing market share, disrupting or being disrupted. Most of us dislike those emotions and behaviors because they fill us with anxiety, making us feel we are under threat and may be marginalized or destroyed if we don’t strike first. It’s a scarcity-based view of the world. What if we could shift from fear to hope, from a mindset of scarcity to one of abundance? The idea that we can create new markets and grow without disrupting others suggests that business does not have to be a destructive, fear-based, win-lose game.
To be sure, fear can be effective. “Disrupt or die” is a strong motivator for an organization to act. But the hope of making a positive-sum contribution to business and society is equally strong. That’s why it’s important to understand and act on both ends of the spectrum of market-creating innovation, and why nondisruptive creation is an essential complement to disruption. Each has a role to play in building a compelling future.
Editor’s note: W. Chan Kim and Renée Mauborgne are the authors of Beyond Disruption: Innovate and Achieve Growth Without Displacing Industries, Companies, or Jobs (Harvard Business Review Press, 2023), from which this article is adapted.
Kim and Mauborgne redefine and expand the existing view of innovation by introducing a new approach, nondisruptive creation, that is free from the destructive displacement that happens when innovators set out to disrupt. Beyond Disruption shows how this new approach to innovation allows companies to grow while also being a force for good.
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