I don’t know….it wasn’t me. Maybe it was Chicken Little Chris Brown. It certainly supports his ILLUMIGEDDON theory. Yea, let’s say it was him.

Well, I decided to go to Harvard to find out. A Harvard Business School professor Clay Christensen, The Wrong Kind of Innovation, coined the term “disruptive innovation”. In fact it’s helpful to understand Christensen’s theory of the three types of innovation:
1. The first are “disruptive / empowering” innovations. These transform complicated, costly products that previously had been available only to a few people, into simpler, cheaper products available to many. Disruptive innovations entail a discontinuous shift from “how things worked” in the past to how they work today and in the future. The Ford Model T was an empowering innovation, as was the Sony transistor radio. Empowering innovations create jobs for people who build, distribute, sell and service these products.
2. The second type are “sustaining” innovations. These replace old products with new. The Toyota Prius hybrid is marvelous–yet every time a customer buys a Prius, a Camry is not sold. Sustaining innovations replace yesterday’s products with today’s products. They keep our economy vibrant–and, in dollars, they account for the most innovation. But they have a zero-sum effect on jobs and capital.
3. The third type are “efficiency” innovations. These reduce the cost of making and distributing existing products and services–like Toyota’s just-in-time manufacturing in car making and Geico in online insurance underwriting. Efficiency innovations almost always reduce the net number of jobs in an industry, allow the same amount of work (or more) to get done using fewer people.

I learned that industries typically transition through these types of innovations. Let me explain… The early IBM mainframe computers were so expensive that only big companies could own them. Then came the PCs, a disruptive / empowering innovation that allowed many more people to own computers and realize Bill Gates’ vision that one day every home and every office station will have a PC. Then companies like Hewlett-Packard hired and deployed thousands of workers to make better computers — sustaining innovations. Finally, the industry began to outsource its operations, becoming much more capital efficient. This reduced net employment within the industry, but freed capital that had been used in the supply chain — efficiency innovations.

Let’s examine our beloved lighting industry. I contend that the only disruptive innovation was the incandescent light bulb thanks to Thomas Alva Edison, from New Jersey by the way. It was disruptive because it was an innovation that helped create a new market, accessible to many and disrupting the then existing kerosene lighting market. New entrants joined GE, like Westinghouse, Sylvania, Philips, and others to build a dynamic industry, thanks to disruptive innovation. Afterwards, what has happened in the lighting industry, its long history, it can be argued, is continuous sustaining innovation. Along came the evolution to fluorescents, HID, halogen, PL, CFL, electronic ballast, dimming, controls, etc……. creating better value to existing products allowing the incumbent firms within to compete against each other’s sustaining improvements. Efficiency innovations make products cheaper and businesses more efficient and has occurred throughout our mature industry in the manufacturing process, the marketing and sales activities, the distribution channels, logistics, e-commerce, etc. Note: efficiency innovations pay off rather quickly. Disruptive innovations need resources and could take many years to pay off.

In analyzing all of this, I find it particularly relevant that it is very difficult for a new market entrant to gain traction with an incremental / sustaining innovation, since the market incumbents can easily incorporate the new technologies while maintaining their other advantages like brand loyalty, cost efficiency, supply chain access, distribution network, customer contact and so on.

Now I ask you: is LED disruptive innovation or what?

As long as lighting is just lighting, I don’t think it is. I ask again, is the phone still only a phone? We have lived through the many lighting product evolutions before and the same players still dominate. LED is just another incremental product improvement……sustaining innovation, right? It may be a revolutionary improvement since it has the potential to replace every lighting system commercially available. But, it’s still affecting the lighting business only, right? Maybe not……

Let’s agree that LED / OLED / ETC technologies are continuous sustaining innovations improving quality of light, energy efficiency, and long-life but Smart Lighting will not only allow consumers to manipulate the timing, intensity, and quality of light but will internally interact and track and react and adapt to the users’ living and working patterns. It’s not just about illumination only. Well then, my good friend and adversary Chris Brown is right…..Smart Lighting is disruptive, very disruptive innovation: it has its own apps, IoT / IoE / PoE applications, embedded devices, sophisticated control capabilities, energy monitoring, interactive communications, mobile wireless communications, Wi-Fi, Li-Fi, automatic dimming, network technologies, plug-and-play interaction, facial recognition, integrated security, connected lamps, programmed to research the space, the ability to transmit sensitive information, wireless protocol implementations, web services, mobile applications, backend infrastructure and stuff we haven’t heard of yet.. One more thing: lighting may wind up being the core connector to everything (IoE). Be careful, new entrants can thrive in such an environment.

So what am I saying? Simply, we are not in the lighting business any longer. We are in the Smart Lighting business. The LED technology and what is to follow is still sustaining innovation but let me repeat, Smart Lighting is not just about illumination any more. That’s why it may be disruptive innovation, the first since the Edison light bulb. Let’s hope so, as it will usher in an era of prosperity and innovation the world has never seen.

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  1. Bill, great thinking. “We are not in the lighting business any longer. We are in the Smart Lighting business.” This “simple” shift in and of itself will disrupt companies and careers. It will require a new way of looking at markets, competition, customers … the world. Value propositions will be completely re-imagined as we discover the jobs our customers need done with the new possibilities.

  2. David Gordon says:

    Bill – two thoughts … and somewhat dissimilar but both disruptive

    Perhaps lighting as we’ve known it is no longer lighting tomorrow. Perhaps it is an evolution of electronics given that much of the future innovation is electronically driven vs having a heritage from Edison. The “smart lighting”, as you coined it, will utilize electronics significantly. Integration of audio, video, data … enhanced remote functionality … security … data monitoring (and storage and, as Microsoft calls it, “machine learning”) and more.

    But just as disruptive can be the modes to the channel. New competitors daily. Some with questionable origins (and quality and warranty issues … etc). And more companies willing to sell direct (and more contractors, end-users and others willing to buy direct) as well as sell to other types of distribution (essentially anyone willing to sell “lighting” and even franchise organizations that are focused on energy efficiency and have private label LED / lighting offerings.

    What do Chris and you think of the emergence of additional LED channels? What % of LED industry sales do you think the direct to end-user (for commercial usage, not retail) market make up in 3 years? In 5 years? The non-electrical / lighting channel account for?

  3. Rob Quintal says:

    Bill, Chris,

    I LOVE the dialogue and i came to the realization recently that we (my particular company) are no longer simply a Product Rep. firm, we are a Solutions Integrator. Keep up the great work, you are instigating new thinking for all of us out here in the wild west!

  4. Edward Lenore says:

    Bill- I think you perfectly summed it up “Smart Lighting is not just about illumination any more” – just the same way a Smart watch is not just about telling time any more. As you succinctly explained LED technology is disruptive to the lighting distribution business not as an long life, energy efficient light source, but as a connected light source linked to everything else that has a computer chip in it.

    It is the connectivity that is disruptive, and it is the connectivity that is inviting so many innovators to say “… that is when the light bulb went off …”

  5. Ruud F. de Graaf says:

    Disruptive as it may be, LED technology can still not fully compete with Tube Luminescent ligntning. Until the day it does, you will see really a disruption! Of the market that is…

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