Disruptive Innovation
(Christensen)

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Impact of new technologies (revolutionary change) on a firm's existence. Explanation of Disruptive Innovation of Clayton Christensen. ('97)

Contributed by: Neusa Hirota

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Clayton Christensen disruptive innovation

What is Disruptive Innovation? Description

The Disruptive Innovation model from Clayton Christensen is a theory that can be used for describing the impact of new technologies (revolutionary change) on a firm's existence. Clayton Christensen first coined the phrase "disruptive technologies" in 1997, in his book "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail".
He showed that time and again almost all the organizations that have "died" or been displaced from their industries (because of a new paradigm of customer offering) could see the disruption coming, but did nothing until it was too late.


By doing what good companies are supposed to do - cater to their most profitable customers and focus investments where profit margins are most attractive - established industry leaders are on a path of Sustaining Innovations and leave themselves open for disruptive technologies to bury them. This happens because the resource allocation processes of established companies are designed to maximize profits through sustaining innovations, which essentially involve designing better and better mousetraps for existing customers or proven market segments. When Disruptive Innovations (typically cheaper, simpler to use versions of existing products that target low-end or entirely new customers) emerge, established companies are paralyzed. They are almost always motivated to go up-market rather than to defend these new or low-end markets, and ultimately the disruptive innovation improves, steals more market share, and replaces the reigning product.


Types of Innovation

Companies have two basic options when they seek to build new-growth businesses. They can try to take an existing market from an entrenched competitor with sustaining innovations. Or they can try to take on a competitor with Disruptive Innovations that either create new markets or take root among an incumbent's worst customers.

There are two distinct types of Disruptive Innovations. The first type creates a new market by targeting non-consumers. The second competes in the low end of an established market.
 

Origin of the Disruptive Innovation model. History

Christensen's research and studies at Harvard.


Usage of the Disruptive Innovation method. Applications

  • All kinds of companies - as they can be impacted by technology innovation/change.

Steps in Disruptive Innovation. Process

  • The model shows that, as the performance demanded by the customers of an existing market increases over time, so does the performance provided within a technological paradigm. Often the performance improvement provided has a different trajectory to the trajectory of performance improvement demanded by the customers (see figure). When the trajectory slopes differ, and the performance provided exceeds performance demanded, new technologies that were only performance competitive in remote market niches may migrate into other customer networks. This provides innovators with a vehicle to new customers, who would have previously viewed their offerings as substandard; and enables them to offer established mainstream markets a new set of performance value attributes that are now more relevant than the current paradigm.
  • Disruption and commoditization actually go hand in hand. A company that overshoots, simply can't win (a firm that improves a product to the point that it is more than good enough for customers to use and pay a premium for). Either disruption will steal its markets, or commoditization will steal its profits. While new waves of disruption wash over an industry, the place where the money will be will shift across the value chain over time. While this happens, companies that position themselves at a spot in the value chain where performance is not yet good enough will capture the profit.

Limitations of Disruptive Innovation. Disadvantages

  • Disruptive Innovation requires a separate strategy process. This process must be emergent and focused on unanticipated opportunities, problems and successes, rather than intended and focused on improved understanding of what works and what doesn't.
  • Instead of designing products and services that address current behavior of current customers, the underlying aims of people should inform the design of innovations. Understanding what people really need is however far from easy.
  • Disruptive businesses can't achieve big profits very fast, due to their nature (addressing new markets, or addressing low end of existing markets). Venture capitalists are increasingly impatient for businesses to deliver profits.

Assumptions of Disruptive Innovation. Conditions

Companies risk death with decisions to ignore technologies that do not appear to address their customers' needs, as they become fatal when two paradigmatic trajectories of progress interact.


Book: Clayton M. Christensen - The Innovator's Dilemma -

Book: Clayton M. Christensen - The Innovator's Solution -

Book: Clayton M. Christensen - Seeing What's Next  -




Disruptive Innovation Forum (29 topics) Help
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  Is Disruptive Innovation Radical?
Disruptive Innovation is often incorrectly described as a radical rather than incremental change in technology. In fact, one of the fundamental elements of Christensenís work was to illustrate that market incumbents rather than entrants are mainly re...
     
 

Ways to Incorporate Disruptive Innovation as Part of the Management Agenda

A few days ago I was in a conversation with Adam Hartung, who observed brand managers are constrained, as a matter of practicality, to focusing exclusively on sustaining innovation. They normally donít focus on entirely new, disruptive innovation.
     
 

Disruptive Innovation: What Causes the Creative Leap?

What causes the difference in magnitude of creative leap? One may create a quantum leap, but other innovations may not be that significant. Is there a process to manifest and channelize creative energy? Obviously many people were and are exist...
     
 

Is Cirque du Soleil the iPhone or the Seiko of Circus?

An article about the Cirque du Soleil I recently read made me wonder whether we should think of Cirque du Soleil as the iPhone o...
     
 

Better Input from Consumers Needed for Disruptive Innovation

Technological innovations bring positivity, a better quality of life. But have they considered those without access to normal technology, to achieve current level of innovation?
A little prudence must be used in terms of consumption, since there...
     
 

The Word 'Disruptive' in Disruptive Innovation

I wonder if the term 'disruptive' is in fact the appropriate word.
If it's agreed that it means: unexpected, large scale, sudden, different approach innovation or large unexpected / clever changes to a product (or something similar) which will c...
     
 

Disruptive Innovations Question our Knowledge

It's hard to change. This holds for organisations and people. A disruptive innovation questions what we know and exposes that we don't know, what we don't know.
It's an issue of complexity and requires a complex way forward of moving from certai...
     
 

How to Sustain Disruptive Innovation?

After gaining entry into some (new) market segment through disruptive innovation, how do you SUSTAIN your position and growth...
Does that require other cycles of disruptive innovation, or will regular incremental innovation do?...
     
 

Distinguishing Three Types of Innovation

Christensen (2014) argues that investing in different types of innovation will influence markets and firms in different ways. Therefore it is important to make a distinction between the different types of innovations, and when assessing them to use a...
     
 

Leadership Skills / Approaches for Successful Innovation

Innovation leadership requires other approaches than general leadership for the core business. Furr and Dyer (2014) outline some unique leadership skills/approaches required for successful innovation:

1. RATHER THAN DICTATING...
     
 

WHAT is Being Innovated? The 4 Ps of Innovation

There are actually 4 things or objects that one can innovate:
  1. PRODUCT/SERVICE: Product innova...
     
 

12 Disruptive Technologies

It is important that business and policy leaders understand which technologies might matter to them and prepare accordingly. But which technologies could drive truly massive economic transformations and disruptions in the coming years? McKinsey recen...
     
 

Innovation Strategy: The Three Horizons of Growth (McKinsey)

One of ways of thinking about innovation strategy is to use the 3 Horizons of Growth developed by Steve Coley at McKinsey.
The framework provides a useful mold to formulate an organizationís product and service portfolio strategy. It's a...
     
 

How to Develop Disruptive Innovation Skills?

I believe disruptive innovation skills can be mostly taught.
Beyond the associative skills which is cognitive, the other behavioral skills required to be a true innovator are discovery skills - questioning, observing, networking an...
     
 

Disruptive Innovation or Improved Technology?

Disruptive innovation is only a means of improving existing products as it creates new, better and unexpected sets of values of products. Every modern organization should strive to maneuver by being able to identify trends and disruptors with the abi...
     
 

Leadership and Taking Action

Don't forget the important point of taking action after all the theorising! Sometimes I think it's more down to the leadership of the company.
If you stand on train tracks and see the train coming don't just stand there until it hits you....
     
 

Impact of the New Technology

Our countries are not concerned by this issue because not developed. We are only getting negative impacts due to this technology development.
However, I can add that theses negative impacts concern natural resources ( coltan ) in my count...
     
 

Disruptive Innovation and Public Sector Organisations

This model appears to describe the potential life cycle of a firm in market economies where profit maximisation is the goal. If public good is the goal as provided by public sector organisations then no need for innovation to be hoarded as no advanta...
     
 

Strategic Options for Old-Technology Firms

What should be the strategic response of old-technology firms when a promising new technology shows up? Typically firms respond by either
1. Fighting the new technology, or
2. Trying to make a transition to the new technol...
     
 

Comparison Disruptive Innovation versus Blue Ocean Strategy

Is Disruptive Innovation a liitle more detail of Blue Ocean Strategy??
If not whats the difference between the two?...
     
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Expert Tips - Disruptive Innovation Premium
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How Can Incumbents Respond to Disruptors?

5 Strategic Options in Reaction to Disruptors
 
 

How to Find Good Product Ideas? List of 10 Approaches

Discovering New-Product Ideas, Creative Approaches
 
 

Innovation Pitfalls

Avoiding Innovation Traps
 
 

Challenging the Existing Strategic Logic

Finding New Markets
 
 

The Simple-Cheap-Convenient Approach

Addressing the Unmet Needs of Customers
 
 

Recent Innovation Trends | New Innovation Types

Open innovation, User Innovation, Value Innovation, Bottom-up Innovation
 
 

Key Challenges of Internet Age for Management and for Product and Service Development

R&D, Product Development, Service Development, Strategy, Marketing, Innovation, Visioning
 
 

How to Detect Consumer Needs that are Unmet?

Product Innovation, New Product Development, Innovation Strategy
 
 

How to Think Differently in Innovation?

How to Be Innovative, Innovative Thinking
 
 

Distinguish Disruptive Technology Innovation From Disruptive Marketing Innovation!

2 Distinct Capabilities...
 
 

How to Lead an Innovation Team

Best Practices, Innovation Team Management
 
 

How to Design Experiments to Support Decision-making on Strategic Innovations

Strategic Innovation, Strategic Decision-making, Strategic Experimenting, Experiments, Strategic Testing, Innovation Tes
 
 

Classes of Innovation | Sources of Innovation

Innovation, Creativity, Organizational Innovativeness, Lateral Thinking, Out of the Box Thinking, Blue Ocean Strategy
 
 

Creating Organizations to Produce Breakthrough Innovations

Best Practices, Critical Factors, Creating an Organization to lead Radical Innovation
 
 

Innovating by Reconsidering Value Delivery

Fundamental Innovation
 
 

Why Large Firms are Having Difficulties to Deal with Disruptive Innovations

Innovation Management
 
 

What Makes a Company Innovative?

Innovation Best Practices, R&D Best Practices, Corporate Innovation
 
 

Three Critical Capabilities in Developing a Strategic Corporate Disruptive Innovation Competence

(Disruptive) Innovation Competence, Strategic Innovation Capability, Corporate Strategy, Innovation Leadership
 
 

Big-Bang Disruption

Technological Innovation
 
 

Predecessor of Christensen

Technology-driven Change Theory
 
 

Misunderstandings on the Concept of Disruptive Innovations

Technology Innovation
 
 

How BOP Countries Can Disrupt Western Markets

Disruptive Innovation, Bottom of the Pyramid, Country-level Strategy
 
 

Why Some Technology Revolutions Take Off and Others Don't

Adoption of New Technologies
 
 

Geographic Dimension to Explain Disruptive Innovation in Emerging Countries

Disruptive Innovation in Emerging Countries
 

Resources - Disruptive Innovation Premium
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Asymmetric Innovation

Challenger or latecomer firms

Disruptive Technologies

Emergence of Competition

Introduction to Innovation and Disruptive Technologies

Innovation Management, Innovation Strategy

Design Thinking for Innovation

Innovation, Entrepreneurship, Design Thinking, CSR, Social Entrepreneurship, Social Innovation

Disruptive Innovation: Why Market Leaders Fail

Disruptive Innovation, Innovation Strategy, Strategic Innovation, Product Development, Disruptive Technology

Strategic Innovation Leadership

Leadership, Strategic Leadership, Innovation Management

Distinctive vs. Dynamic Capabilities

Inside-out Business Strategy

The Importance of Noncustomers

Market Research, Customer Strategy, Innovation Strategy, Customer Survey Pitfalls

Disruptive Innovation Diagram

Innovation Management
 

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News

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Videos

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Presentations

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Disruptive Change
     

Compare with:  Product Life Cycle  |  Twelve Principles of the Network Economy  |  Bass Diffusion Model  |  Ten Schools of Thought  |  Blue Ocean Strategy  |  Positioning  |  Innovation Adoption Curve  |  Marketing Mix  |  Forget Borrow Learn  |  Four Trajectories of Industry Change  |  Co-Creation  |  Three Dimensional Business Definition


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