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

Contents

  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
  6. Print

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  -


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Disruptive Innovation Education & Events


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Best Practices - Disruptive Innovation Premium
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When trying to find innovative ideas for your orga...
     
 
  Innovation Strategy: The Three Horizons of Growth (McKinsey)
One of ways of thinking about innovation strategy ...
     
 
  Strategic Options for Old-Technology Firms
What should be the strategic response of old-te...
     
 
  Tips for Innovation Strategy
As a part of corporate success factor development ...
     
 
  Disruptive versus Incremental Innovation
Typically, Incremental Innovation exploits ...
     
 

Expert Tips - Disruptive Innovation Premium
 

How Can Incumbents Respond to Disruptors?

In recent years, the challenges to incumbent major...
Usage (application): 5 Strategic Options in Reaction to Disruptors
 
 
 

How to Find Good Product Ideas? List of 10 Approaches

In his book “Product Leadership: Creating and L...
Usage (application): Discovering New-Product Ideas, Creative Approaches
 
 
 

Innovation Pitfalls

Harvard Professor R. Moss Kanter describes 4 commo...
Usage (application): Avoiding Innovation Traps
 
 
 

Challenging the Existing Strategic Logic

A tool by  
 
 

The Simple-Cheap-Convenient Approach

Based on Christensen’s model of disruptive innovat...
Usage (application): Addressing the Unmet Needs of Customers
 
 
 

Distinguish Disruptive Technology Innovation From Disruptive Marketing Innovation!

It is necessary to distinguish between disruptive...
Usage (application): 2 Distinct Capabilities...
 
 
 

How to Detect Consumer Needs that are Unmet?

In their article New Business Models in Emerging M...
Usage (application): Product Innovation, New Product Development, Innovation Strategy
 
 
 

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

The Internet age represents a huge challenge for m...
Usage (application): R&D, Product Development, Service Development, Strategy, Marketing, Innovation, Visioning
 
 
 

Recent Innovation Trends | New Innovation Types

Roland Bel (2012) outlines and explains four types...
Usage (application): Open innovation, User Innovation, Value Innovation, Bottom-up Innovation
 
 
 

How to Think Differently in Innovation?

Strategy is always related with risk, due to marke...
Usage (application): How to Be Innovative, Innovative Thinking
 
 
 

How to Lead an Innovation Team

In order to become a great innovation team leader,...
Usage (application): Best Practices, Innovation Team Management
 
 
 

Innovating by Reconsidering Value Delivery

When innovating their business model, companies ne...
Usage (application): Fundamental Innovation
 
 
 

Creating Organizations to Produce Breakthrough Innovations

Since 50 years, the Pentagon’s Defense Advanced Re...
Usage (application): Best Practices, Critical Factors, Creating an Organization to lead Radical Innovation
 
 
 

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

The probability of success of a major innovatio...
Usage (application): Strategic Innovation, Strategic Decision-making, Strategic Experimenting, Experiments, Strategic Testing, Innovation Tes
 
 
 

Classes of Innovation | Sources of Innovation

TWO CLASSES OF INNOVATION
Innovation can be t...
Usage (application): Innovation, Creativity, Organizational Innovativeness, Lateral Thinking, Out of the Box Thinking, Blue Ocean Strategy
 
 
 

Why Large Firms are Having Difficulties to Deal with Disruptive Innovations

Christensen explains why many firms, especially la...
Usage (application): Innovation Management
 
 
 

Big-Bang Disruption

BBD is a term coined by Accenture gurus Larry Drow...
Usage (application): Technological Innovation
 
 
 

What Makes a Company Innovative?

A futurethink 2006 Innovation Tracker Survey menti...
Usage (application): Innovation Best Practices, R&D Best Practices, Corporate Innovation
 
 
 

Three Critical Capabilities in Developing a Strategic Corporate Disruptive Innovation Competence

Skarzynski and Rufat-Latre (2011) discovered that ...
Usage (application): (Disruptive) Innovation Competence, Strategic Innovation Capability, Corporate Strategy, Innovation Leadership
 
 
 

Predecessor of Christensen

The theory of Disruptive Innovation was actually n...
Usage (application): Technology-driven Change Theory
 
 
 

How BOP Countries Can Disrupt Western Markets

After the Second World War, Japan started to devel...
Usage (application): Disruptive Innovation, Bottom of the Pyramid, Country-level Strategy
 
 
 

Designing Complex Products or Systems Through Iterative Rapid-cycle Prototyping

Today, organizations are increasingly developing a...
Usage (application): Design Thinking, Disruptive Innovation, Blue Ocean Strategy, Introducing Complex Systems, Co-Creation
 
 
 

Misunderstandings on the Concept of Disruptive Innovations

In their paper “A Reflective Review of Disruptive ...
Usage (application): Technology Innovation
 
 
 

Why Some Technology Revolutions Take Off and Others Don't

Back in 1962, Thomas Kuhn wrote “Structure of Scie...
Usage (application): Adoption of New Technologies
 
 
 

Geographic Dimension to Explain Disruptive Innovation in Emerging Countries

In the past, it was generally thought that the Wes...
Usage (application): Disruptive Innovation in Emerging Countries
 
 

Resources - Disruptive Innovation Premium

Asymmetric Innovation

Presentation by Chris Wu on Asymmetric Innovation....
Usage (application): Challenger or latecomer firms
 

Disruptive Technologies

Ron Adner and Peter B. Zemsky formalize the phenom...
Usage (application): Emergence of Competition
 

Introduction to Innovation and Disruptive Technologies

This presentations is an introduction into the con...
Usage (application): Innovation Management, Innovation Strategy
 

Explained: How can Innovative Players Beat Large, Established Firms?

How is it possible that small entrants with limite...
Usage (application): Disruptive Innovation, Innovation Strategy, Competition, Innovators Dilemma, Market Segmentation, Sustaining Innovation
 

Prof. Clay Christensen Explains Disruptive Innovation

According to Professor Clay Christensen, a "disrup...
Usage (application): Innovation Strategy, Strategic Marketing, Research and Development, Strategic Vision
 

Design Thinking for Innovation

This presentation is about design thinking and the...
Usage (application): Innovation, Entrepreneurship, Design Thinking, CSR, Social Entrepreneurship, Social Innovation
 

Disruptive Innovation: Why Market Leaders Fail

In this animated video Prof. Robert Perrons explai...
Usage (application): Disruptive Innovation, Innovation Strategy, Strategic Innovation, Product Development, Disruptive Technology
 

Strategic Innovation Leadership

Presentation about Strategic Innovation Leadership...
Usage (application): Leadership, Strategic Leadership, Innovation Management
 

Distinctive vs. Dynamic Capabilities

In this presentation it is about Distinctive Capab...
Usage (application): Inside-out Business Strategy
 

The Importance of Noncustomers

Even the biggest enterprises (other than a governm...
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Disruptive Innovation Diagram

Download and edit this 12manage PowerPoint graphic...
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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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