What is Horizon 2 Innovation?

Also known as Disruptive innovation, Horizon 2 (H2) Innovation creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances.

Disruptive Innovation is a term coined by Clayton Christensen. In his book The Innovator’s Dilemma he shows that companies tend to innovate faster than their customers’ needs eventually ending up with products that are too sophisticated and expensive for a majority of the product’s addressable market. This opens the door for simpler and cheaper products to disrupt the bottom or specific segments of the market.

Examples of Horizon 2 Innovation:

• Personal computers disrupting mainframes
• Salesforce.com cloud-offering disrupting the enterprise software market
• Cellular phones disrupting plain old fixed telephones

When developing an ROI model for Horizon 2 Innovation, the following sections of the SOFIA model should be given the highest priority:

• Q1 – Revenue/Profit Margin Improvements on New Offerings
• Q2 – R&D Optimization