Developing Disruptive and Social Innovation: The Impact Model

By Mostafa Sayyadi and Michael J. Provitera 

There is a lack of an effective model that can support internal entrepreneurs in their disruptive and social innovation. We create a comprehensive framework which we call the impact model. This new model fills the gap, taking organizations in the direction of training internal entrepreneurs, thus known as intrapreneurs, to start initiatives that affect society and ensure their survival in diversity, equity, and inclusion (DEI). Organizations cannot innovate without taking into concern diversity, equity, and inclusion. On the other hand, diversity, equity, and inclusion should not be tantamount in place for innovation. Organizations must address diversity, equity, and inclusion as they innovate and evaluate what becomes disruptive for both a product and social concern. 

Introduction

We carefully examined approximately 100 organizations around the world, and we found out that although many of them rank at the highest levels in investments made for the development of social innovations, they are not in good rankings in terms of achieving social innovation. Thus, lacking the knowledge of being a diverse, equity-driven, and inclusive organization. In some cases, a manufacturer may spend a lot of money to achieve social innovation, but the results of these initiatives may appear disappointing. ^{[1] [2]} What became clear in our examinations was that the organization’s generous spending on social innovation was not delivering the desired results because of a flawed business model that was committed to the way of the past. A new model was needed for creating social innovations that could more effectively align the organization with its changing ecosystem so that it could address not only the dynamic changes in the customer base but also the social structure of the organization.

After interviewing approximately 170 middle and senior managers of an organization that had branches in 48 countries around the world. We revealed that the achievement of social innovation requires the realization of disruptive innovation that is conducted by human capital which can more effectively understand the needs and demands of society. People are diverse more than ever today, they arise from different social strata which are indicative of equity, and they must be included in organizational decision-making. Organizations that can hire more capable human capital can surpass their competitors in creating disruptive and social innovations and be better equipped for providing a culture of diversity, equity, and inclusion. The two risks that organizations face today are non-financial risks such as diversity, equity, and inclusion, and risk potential such as failing to take the necessary steps with product development.

Thus, we offer a new model that addresses these challenges. The model deploys the organization’s human capital and helps them to engage in disruptive innovation instead of moderate risk-taking. Disruptive innovations are those that gain a large market share by identifying and responding to unmet customer needs and can have a large impact on industry structure. ^{[3] [4] [5] [6]} Organizations that engage in disruptive innovation, although they quickly gain a large share of the market, also purposefully achieve what we call social innovation. ^{[7] [8]} In fact, by understanding their social responsibility and profit motivation, these organizations see society’s problems as an opportunity. Building such an effective organization is facilitated by the implementation of the impact model which not only addresses the financial sustainability of an organization but also meets the needs of both employees and customers.

The Impact Model: A Catalyst for Transformation

The current condition of organizations and the business models they use have caused challenges with disruptive innovation. Disruptive innovation seeks to create breakthrough innovations to provide better products, but it also may impact both the social architect of the organization and the customer base. [^{9] [10]} Since innovation requires support along with changing some approaches to work for some employees, top managers must be aware of not only the financial risk but also the non-financial risk as well. Many CEOs are paid as the shareholder value increases and thus some CEOs are profit-seeking and use short-term approaches. Disruptive innovation is difficult for many organizations.

The impact model focuses on a few basic points. First, we focus on the importance of disruptive innovation in gaining a major market share and reducing organization costs. The model also fulfills the hidden and unmet needs of customers by addressing them on the bases of diversity, equity, and inclusion. Thus, the model provides a goal of social innovation, involving human capital in a more effective way in the innovation process. This approach leads to the growth of creative thinking in organizations which enhances survival. 

There is a need to realize disruptive innovation and achieve high levels of social innovation. In doing this, the first step we considered for this model was that the organization should balance its financial and social goals. This step seeks to focus on the profitability of the organization but also seeks the social impact of diversity, equity, and inclusion. Equity is at the forefront of our decision to create this model as we found a story published in Life Magazine in which a Pakistani child was sewing a Nike because they only earned six cents an hour. This photo resulted in countless calls around the world to boycott Nike products and led to a fatal blow to the reputation of one of the biggest and best brands of sports products in the world—a true non-financial risk. This photo and its consequences led to Nike reforming its supply chain management and repeated advertisements to demonstrate this eventually saved the organization. We suggest that organizations manufacture or produce cheaper and more products for lower-income groups across the globe. This is exactly what Nike did, and by revising many of its safety regulations, this organization cut ties with many local manufacturers and distributors in Asia. In addition, by giving up short-term profits, Nike ultimately ensured its long-term survival in the market. Tesla also added an important concern when they developed a plan that temporarily stopped the production of model-3 long-range automobiles in lieu of the cheaper short-range model-3 cars that meet the governmental stimulus of a $7,500 rebate from the electric car incentive for personal taxes.

Our model then extends the collaboration of two departments of human resource management and customer service relations to create a new and better image of the organization in both the external and internal environments of the organization. In the past, some employees considered managers to be deceitful and believed that managers were only caring about profit at the expense of building an inclusive culture. In addition to creating a culture of innovation and risk-taking that strengthened disruptive innovation, we suggest that organizations create a defender image of society for their employees offering a sense of belonging to the organization. Also, customers had similar ideas that employees have, and organizations reached out to meet the needs of the new diverse customer that was at one time, overlooked. The mission of the customer service relations department was to correct this perspective and created a new and better image of the organization for customers, which ultimately led to greater customer loyalty. The customer service relations department was trained in diversity, equity, and inclusion by what we call a deep dive learning event. ^[11]

In the organizations we reviewed, the human resource management department conducted training workshops to develop human capital and involve them in disruptive innovation coupled with diversity, equity, and inclusion awareness. This linked innovation with disruptive innovation. Human resources were reminded that ignoring the link between disruptive innovation and social innovation due to budget constraints was not acceptable. Also, the product development department of organizations began to design new and cheaper products for developing countries, which played a significant role in expanding the market of the manufacturer’s products in countries such as India and Bangladesh. 

Based on these findings, the following model is presented for the development of the link between destructive innovation, social innovation, and diversity, equity, and inclusion:

In Conclusion

We developed a new model that addresses not only innovation but also DEI. The impact model captures the essence of today’s leading organizations as they begin to develop better products to meet the unique needs of their customers while training their employees on the forefront of social and cultural norms necessary for survival. The article explained the link between disruptive innovation and social innovation, which leads to the growth of social innovations and benefits society at large. The implementation of this model acts as a transformational catalyst that brings the social impact of decision-making to the upper echelon of the organization by helping leaders to create both disruptive and social innovations.

About the Authors

Mostafa Sayyadi works with senior business leaders to effectively develop innovation in companies and helps companies—from start-ups to the Fortune 100—succeed by improving the effectiveness of their leaders.

Michael J. Provitera is a senior faculty professor of Management and Leadership, in the Andreas School of Business at Barry University, Miami, Florida, USA . He is an author of Level Up Leadership: Engaging Leaders for Success, published by Business Expert Press.

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