Disruptive Innovation

A Disruptive Innovation is an innovation that disrupts and existing value network within a lifetime.

• Context:
  • It can range from being a Disruptive Technology to being a Disruptive Process (such as an election process, a national constitution).
• Example(s):
  • a Disruptive Technology, like internal combustion engines, electricity generation, nuclear bombs, PCs, smartphones, and LLMs.
  • a Disruptive Standard, such as morse code, TCP-IP, Wi-Fi, and SQL.
  • a Disruptive Ideology, like Communism.
  • a Disruptive Market, such as eSports.
  • …
• Counter-Example(s):
  • a Sustaining Innovation.
  • a Foundational Technology, such as The Internet, and Blockchain.
• See: Tranformational Sustaining Innovation, New Product Development.

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References

2018

• (Wikipedia, 2018) ⇒ https://en.wikipedia.org/wiki/disruptive_innovation Retrieved:2018-8-28.
  • In business, a disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market-leading firms, products, and alliances. The term was defined and first analyzed by the American scholar Clayton M. Christensen and his collaborators beginning in 1995, and has been called the most influential business idea of the early 21st century. Not all innovations are disruptive, even if they are revolutionary. For example, the first automobiles in the late 19th century were 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, whereas the first thirty years of automobiles did not. Disruptive innovations tend to be produced by outsiders and entrepreneurs, rather than existing market-leading companies. The business environment of market leaders does not allow them to pursue disruptive innovations when they first arise, because they are not profitable enough at first and because their development can take scarce resources away from sustaining innovations (which are needed to compete against current competition). A disruptive process can take longer to develop than by the conventional approach and the risk associated to it is higher than the other more incremental or evolutionary forms of innovations, but once it is deployed in the market, it achieves a much faster penetration and higher degree of impact on the established markets. Beyond business and economics disruptive innovations can also be considered to disrupt complex systems, including economic and business-related aspects.

2016

• https://hbr.org/2017/01/the-truth-about-blockchain
  • … QUOTE: Our experience studying technological innovation tells us that if there’s to be a blockchain revolution, many barriers — technological, governance, organizational, and even societal — will have to fall. It would be a mistake to rush headlong into blockchain innovation without understanding how it is likely to take hold. True blockchain-led transformation of business and government, we believe, is still many years away. That’s because blockchain is not a “disruptive” technology, which can attack a traditional business model with a lower-cost solution and overtake incumbent firms quickly. Blockchain is a foundational technology: It has the potential to create new foundations for our economic and social systems. But while the impact will be enormous, it will take decades for blockchain to seep into our economic and social infrastructure. …

2015

• (King & Baatartogtokh, 2015) ⇒ Andrew A. King, and Baljir Baatartogtokh. (2015). “How Useful is the Theory of Disruptive Innovation?. ” MIT Sloan Management Review 57, no. 1
  • QUOTE: Few academic management theories have had as much influence in the business world as Clayton M. Christensen’s theory of disruptive innovation. But how well does the theory describe what actually happens in business? ...

    ... We surveyed and interviewed 79 experts on 77 proposed examples of disruption identified by Christensen and Raynor. ...

    ... Before surveying and interviewing experts on each of the 77 cases, we identified four key elements of the theory of disruption: (1) that incumbents in a market are improving along a trajectory of sustaining innovation, (2) that they overshoot customer needs, (3) that they possess the capability to respond to disruptive threats, and (4) that incumbents end up floundering as a result of the disruption. ...

Sample of 77 Disruptive Innovations

This sample of disruptive innovations corresponds to the 75 cases listed in The Innovator’s Solution and two cases discussed at length in The Innovator’s Dilemma.

• 802.11 (Wi-Fi)
• Amazon.com
• Barnes & Noble
• Beef processing
• Bell Telephone
• Black & Decker
• Blended plastics
• Bloomberg
• Boxed beef
• Canon photocopiers
• Catalog retailing
• Charles Schwab
• Circuit City, Best Buy
• Cisco
• Community colleges
• Concord School of Law
• Credit scoring
• Dell
• Department stores
• Digital animation
• Digital printing
• Discount department stores
• Disk drives
• eBay
• ECNs
• Email
• Embraer and Canadair regional jets
• Endoscopic surgery
• Fidelity Management
• Flat panel displays (Sharp and others)
• Ford
• Galanz
• GE Capital
• Google
• Honda motorcycles
• Hydraulic excavators
• Inkjet printers
• Intel microprocessor
• Intuit’s QuickBooks
• Intuit’s TurboTax
• Japanese steelmakers
• JetBlue
• Kodak
• Kodak Fun Saver
• Korean auto manufacturers
• Linux
• MBNA
• McDonald’s
• MCI, Sprint
• Merrill Lynch
• Microsoft DOS
• Minicomputers
• Online stockbrokers
• Online travel agencies
• Oracle
• Palm Pilot, RIM BlackBerry
• Personal computers
• Plastics
• Portable blood glucose meters
• Salesforce.com
• Seiko watches
• SonoSite
• Sony
• Southwest Airlines
• SQL database software
• Staples
• Steel mini-mills
• Sun Microsystems
• Toyota
• Toys-R-Us
• Ultrasound
• University of Phoenix
• Unmanned aircraft
• Vanguard
• Veritas and Network Appliance
• Wireless telephony
• Xerox

2003

• (Thomond et al., 2003) ⇒ Pete Thomond, Torsten Herzberg, and Fiona Lettice. (2003). “Disruptive Innovation: Removing the Innovators Dilemma.” In: British Academy of Management Annual Conference:'Knowledge into Practice.
  • QUOTE: ... Christensen first coined the phrase ‘disruptive technologies’. He showed that time and again almost all the organisations 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 (Christensen, 1997). They assess the new approaches or technologies and frame them as either deficient or as an unlikely threat - much to the managers’ regret and the organisation’s demise (Christensen 2002). …

1997

• (Christensen, 1997) ⇒ Clayton M. Christensen. (1997). “The Innovator's Dilemma: When new technologies cause great firms to fail." Harvard Business School Press. ISBN:978-0-87584-585-2.
  • QUOTE: The technological changes that damage established companies are usually not radically new or difficult from a technological point of view. They do, however, have two important characteristics: First, they typically present a different package of performance attributes—ones that, at least at the outset, are not valued by existing customers. Second, the performance attributes that existing customers do value improve at such a rapid rate that the new technology can later invade those established markets.
  • NOTES:
    • Disruptive Innovation: Christensen introduces the concept of disruptive innovation, where small companies with inferior but evolving technologies eventually displace established firms by targeting overlooked customer segments.
    • Incumbent’s Dilemma: Successful companies face a dilemma when deciding whether to focus on high-end customers with sustaining innovations or risk cannibalizing their own products by investing in unproven, disruptive technologies.
    • Misalignment of Resources: Large companies allocate resources to areas that deliver the highest immediate returns, neglecting emerging opportunities. This misalignment makes it difficult for them to respond effectively to disruptive innovations.

1995

• (Bower & Christensen, 1995) ⇒ Joseph L. Bower, and Clayton M. Christensen. (1995). “Disruptive Technologies: Catching the Wave." Harvard Business Review Video,

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