Disruptive Innovation

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The term disruptive innovation was coined by Clayton M. Christensen and introduced in his 1995 article Disruptive Technologies: Catching the Wave.

So, what is Disruptive Innovation?

A disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology.

The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market.

Disruptive Innovation

Sustaining Innovation

In contrast to disruptive innovation, a sustaining innovation does not create new markets or value networks but rather only evolves existing ones with better value, allowing the firms within to compete against each other’s sustaining improvements. Sustaining innovations may be either discontinuous.

Disruptive Technology

The term disruptive technology has been widely used as a synonym of “disruptive innovation”, but the latter is now preferred, because market disruption has been found to be a function usually not of technology itself but rather of its changing application. Sustaining innovations are typically innovations in technology, whereas disruptive innovations change entire markets.

For example, the automobile was a revolutionary technological innovation, but it was not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles.

The market for transportation essentially remained intact until the debut of the lower priced Ford Model T in 1908. The mass-produced automobile was a disruptive innovation, because it changed the transportation market. The automobile, by itself, was not.

Disruptive Innovation Explained

Clay Christensen, Harvard Business School professor and the world’s most influential management guru according to the Thinkers50, lays out his landmark theory.

Disruptive Innovation Explained

Examples of disruptive innovation

Personal computersMainframe and mini computers
Mini millsIntegrated steel mills
Cellular phonesFixed line telephony
Community collegesFour-year colleges
Discount retailersFull-service department stores
Retail medical clinicsTraditional doctor’s offices

What to learn next?

What about the internet? Was it also a disruptive innovation? Find out how it all started. Read here all about the history of computer networks.

External References