Disruptive innovation refers to a process by which a product or service initially takes root in simple applications at the bottom of a market and then relentlessly moves upmarket, eventually displacing established competitors. This concept was introduced by Clayton M. Christensen in his groundbreaking book, “The Innovator’s Dilemma.”
Characteristics of Disruptive Innovation
Accessibility
Disruptive innovations often offer simpler, more convenient, and more affordable products or services, making them attractive to a more extensive segment of the population. For instance, the transition from mainframe computers to personal computers provided a more accessible option for individual users and small businesses.
Affordability
Many disruptive innovations reduce costs, allowing broader access to the product or service. An example is mobile telephony, which has become significantly cheaper over time, making communication accessible even in remote areas.
Availability
By increasing the ease of access and affordability, disruptive innovations ensure broader availability. Examples include online learning platforms like Coursera, which have democratized access to quality education.
Types of Disruptive Innovations
Low-End Disruption
Low-end disruption targets customers who do not need the full performance valued by customers at the high end of the market. This often creates a new market by filling the unmet needs of these lower-end consumers. A classic example is the advent of discount retailers.
New-Market Disruption
New-market disruption occurs when a product or service addresses a market segment that has previously been ignored by incumbents. These new opportunities often arise in markets where the only alternative is non-consumption. An example would be the emergence of ride-sharing services like Uber and Lyft, which opened up new transportation options for non-car owners.
Historical Context and Examples
Personal Computers
In the 1980s, personal computers revolutionized the technology industry by providing a simpler, more accessible alternative to expensive mainframe and minicomputers. Companies like Apple and Microsoft led this wave of disruption.
Digital Photography
The shift from film to digital cameras is a pertinent example, with digital photography initially capturing the lower end of the market and eventually becoming the standard choice for both consumers and professionals.
Impact on Markets and Economics
Disruptive innovations can reshape markets by displacing established companies and products. They often lead to significant changes in industry standards and consumer behavior, as they create new value networks.
Comparison with Sustaining Innovation
Unlike disruptive innovations, sustaining innovations improve existing products or services in ways that existing customers expect. These innovations help firms compete against established competitors and tend to focus on higher performance.
FAQs
What are common misconceptions about disruptive innovation?
Can established companies be disruptive?
Related Terms
- Innovation: Introducing something new or making significant improvements to an existing product, service, or process.
- Market Segmentation: Dividing a market into distinct groups of buyers with different needs, characteristics, or behaviors.
- Technological Advancement: Development of new technologies and the improvement of existing ones.
Summary
Disruptive innovation plays a crucial role in making products and services more accessible, affordable, and available to a broader population. It begins at the lower end of the market and gradually moves up, displacing established competitors, and creating new value networks. Understanding this phenomenon is vital for businesses aiming to anticipate market shifts and for consumers who benefit from the broad availability of innovative solutions.
References
Christensen, C. M. (1997). The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business Review Press.
Bower, J. L., & Christensen, C. M. (1995). Disruptive technologies: catching the wave. Harvard Business Review, 73(1), 43-53.
