Disruptive Innovation

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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 

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Disruptive Innovation Special Interest Group.

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Forum about Disruptive Innovation.

Disruptive Change and HR
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Leadership and Taking Action
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Asymmetric Innovation
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Asymmetric Situation is a resulting none-direct-comp (...)
Innovation Ideas in Economic Slowdowns
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Disruptive Innovation or Improved Technology?
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Business Model Innovation
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Comparison Disruptive Innovation versus Blue Ocean Strategy
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Disruptive Innovation and Public Sector Organisations
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Is Value Innovation Disruptive Innovation?
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Blue/Innovate and Red/Disrupt
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Paradigmatic Changes Require Re-orientation of Ones World Views
So often there are changes which are semantic. My view is that paradigmatic changes require re-orientation of ones worl (...)
Leadership Skills / Approaches for Successful Innovation
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A Disruptive Innovation Questions what we Don't Know
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Disruptive Innovation: What Causes the Creative Leap?
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The Resources-Processes-Values (RPV) Framework
The resources-processes-values (RPV) framework is a useful tool to understand why big companies fail in responding to di (...)
The Word 'Disruptive' in Disruptive Innovation
I wonder if the term 'disruptive' is in fact the appropriate word.
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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 n (...)
What is Disruptive Innovation Exactly? Definition
A "definition" of Disruptive Innovation that's frequently quoted is one which is located on Christensen's website. It re (...)
Are Clayton Christensen’s Disruptive Innovation Characteristics Useful in Practice?
A recent write up published in MIT Sloan Management Review concludes that Disruptive Innovation theory is "not very usef (...)
Leapfrogging Technologies by Developing Countries
Leapfrogging is a way for developing countries to benefit from earlier skills and advancements of the developed world by (...)
Is Disruptive Innovation Radical?
Disruptive Innovation is often incorrectly described as a radical rather than incremental change in technology. In fact, (...)
Distinguishing Three Types of Innovation
Christensen (2014) argues that investing in different types of innovation will influence markets and firms in different (...)
Breakthrough versus Disruptive Innovation
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🔥 NEW Cloud Adoption Strategies
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Best Practices

The top-rated topics about Disruptive Innovation. Here you will find the most valuable ideas and practical suggestions.

Innovation Strategy: The Three Horizons of Growth (McKinsey)
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Disruptive versus Incremental Innovation
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Disruptive Innovation: Product versus Platform
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The Jobs to be Done Approach (JTBD) and Disruptive Innovation
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Strategic Options for Old-Technology Firms
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Tips for Innovation Strategy
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Impact of the New Technology
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Typical Disruptive Technologies
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How to Develop Disruptive Innovation Skills?
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Diversity of Perspective is Key to Disruptive Innovation
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How to Sustain Disruptive Innovation?
After gaining entry into some (new) market segment through disruptive innovation, how do you SUSTAIN your position and g (...)

Is Cirque du Soleil the iPhone or the Seiko of Circus?
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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 pr (...)

The Hybrid Innovation Approach to Manage Technological Disruptions
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Expert Tips

Advanced insights about Disruptive Innovation. Here you will find professional advices by experts.

Innovation Pitfalls

Avoiding Innovation Traps
Harvard Professor R. Moss Kanter describes 4 common innovation mistakes and corresponding remedies (HBR Nov 2006): 1. S (...)

How Can Incumbents Respond to Disruptors?

5 Strategic Options in Reaction to Disruptors
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How to Find Good Product Ideas? List of 10 Approaches

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Challenging the Existing Strategic Logic

Finding New Markets
A tool by Kim and Mauborgne is the "Four Actions Framework". This Four Actions Framework can be used to challenge the ex (...)

The Simple-Cheap-Convenient Approach

Addressing the Unmet Needs of Customers
Based on Christensen’s model of disruptive innovation, Norton and Pine argue that experience innovation can effectively (...)

Distinguish Disruptive Technology Innovation From Disruptive Marketing Innovation!

2 Distinct Capabilities...
It is necessary to distinguish between disruptive technology innovation and disruptive marketing innovation, since ther (...)

How to Detect Consumer Needs that are Unmet?

Product Innovation, New Product Development, Innovation Strategy
In their article New Business Models in Emerging Markets" (Harvard Business Review, January-February 2011), Matthew J. E (...)

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

R&D, Product Development, Service Development, Strategy, Marketing, Innovation, Visioning
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Recent Innovation Trends | New Innovation Types

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How to Think Differently in Innovation?

How to Be Innovative, Innovative Thinking
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How to Lead an Innovation Team

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In order to become a great innovation team leader, Ram Charan suggests in the article "P&G's Innovation Culture" (strate (...)

Innovating by Reconsidering Value Delivery

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Creating Organizations to Produce Breakthrough Innovations

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Classes of Innovation | Sources of Innovation

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Why Large Firms are Having Difficulties to Deal with Disruptive Innovations

Innovation Management
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Big-Bang Disruption

Technological Innovation
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What Makes a Company Innovative?

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Three Critical Capabilities in Developing a Strategic Corporate Disruptive Innovation Competence

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Predecessor of Christensen

Technology-driven Change Theory
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How BOP Countries Can Disrupt Western Markets

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Designing Complex Products or Systems Through Iterative Rapid-cycle Prototyping

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Misunderstandings on the Concept of Disruptive Innovations

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Why Some Technology Revolutions Take Off and Others Don't

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Geographic Dimension to Explain Disruptive Innovation in Emerging Countries

Disruptive Innovation in Emerging Countries
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Information Sources

Various sources of information regarding Disruptive Innovation. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.

Asymmetric Innovation

Challenger or latecomer firms
Presentation by Chris Wu on Asymmetric Innovation. The core concept of his new book steps from Clayton's Innovator's Sol (...)

Disruptive Technologies

Emergence of Competition
Ron Adner and Peter B. Zemsky formalize the phenomenon of disruptive technologies that initially serve isolated market n (...)

Introduction to Innovation and Disruptive Technologies

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

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Prof. Clay Christensen Explains Disruptive Innovation

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Design Thinking for Innovation

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Disruptive Innovation: Why Market Leaders Fail

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In this animated video Prof. Robert Perrons explains Prof. Clayton Christensen`s Theory of Disruptive Technologies and h (...)

Strategic Innovation Leadership

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Distinctive vs. Dynamic Capabilities

Inside-out Business Strategy
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Disruptive Innovation Diagram

Innovation Management
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