Disruptive Innovation
(Christensen)

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What is Disruptive Innovation?

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 

Forum Forum discussions about Disruptive Innovation. 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 organization's product ... 59   58 comments Disruptive versus Incremental Innovation Typically, Incremental Innovation exploits existing forms or technologies... Improves upon something that already exists or reconfigures an existing form or technology to serve some other purpose... I... 27   14 comments 🔥 The Six Ds of Exponential Technologies (Diamandis) The Six Ds of Exponentials is a framework developed by Peter Diamandis, an entrepreneur, author, and futurist. The framework explains the six stages that technologies and innovations typically go thro... 23   5 comments 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 tran... 22   8 comments How can Incumbents (Established Corporates) Respond to Disruptors? The challenges to incumbent majors across industries have come mainly from low-cost competitors and from dotcoms (e.g. british Airways and KLM versus EasyJet and Ryanair, Merrill Lynch versus Charles ... 15   5 comments Timing is Important to Make an Innovative Idea Disruptive America had to be discovered more than once, until it really had been discovered. The Apple Newton was a superior answer to a question that people did not bother at that time. Likewise, Kodak invente... 15   10 comments WHAT is Being Innovated? The 4 Ps of Innovation There are actually 4 things or objects that one can innovate: PR... 14   Is Disruptive Innovation Radical? is it a Breakthrough? Disruptive Innovation is often incorrectly described as a radical rather than incremental change in technology. In fact, one of the fundamental elements of Christensen's work was to illustrate that ma... 11   7 comments 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 energ... 10   16 comments Innovation Ideas in Economic Slowdowns Innovation has always been the hallmark of doing good business. A lot of products that we enjoy today that were developed by major corporations started out as innovative ideas. Numerous small business... 9   4 comments 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... 6   2 comments 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 reads: "DISRUPTIVE INNOVATION describes a process by which a product or service t... 6   5 comments 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?... 5   3 comments Slow Innovation: PROs, CONs and Tips When we talk about innovation, we often associate it with disruptive innovation efforts / large-scale processes that change an organization's business model or products quite radically. But, there is ... 5   Why is Disruptive Innovation Difficult? A disruptive innovation questions what we don't know. And it's hard to change our way of thinking. This holds for organizations and people. A disruptive innovation questions what we know and exposes t... 4   Is Value Innovation Equal to Disruptive Innovation? Should value innovation, the corner stone of Blue Ocean Strategy be considered disruptive innovation?... 4   7 comments 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 ... 4   9 comments Innovation in Developing Countries (Leapfrogging) Leapfrogging is a way for developing countries to benefit from earlier skills and advancements of the developed world by skipping altogether a technological stage. For example, many developing countri... 4   Is Consumption 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 mus... 3   2 comments Start a new topic about Disruptive Innovation Sign up for free

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Best Practices The best, top-rated topics about Disruptive Innovation. Here you will find the most valuable ideas and practical suggestions. 🥇 The Jobs to be Done Approach (JTBD) and Disruptive Innovation BACKGROUNDThe Theory of Disruptive Innovation helps companies capture opportunities and understand threats coming from their external environment. In particular for and from innovative entrepreneuri... 28   13 comments 🥈 Disruptive Innovation: Product versus Platform DISRUPTIVE PLATFORMS often have a bigger impact than disruptive products. Some examples: Uber owns no vehicle, but is now the largest taxi company in the world. Alibaba has no inventory, but i... 25   14 comments 🥉 Tips for Innovation Strategy As a part of corporate success factor development process, we have found a need to build up an "Innovation Strategy". Can anybody give good hints or examples of what to or not to take into considerati... 23   10 comments Diversity of Perspective is Key to Disruptive Innovation “All new ideas are combinations of old ideas, but not all idea combinations are created equal,” writes Frans Johannsen. An HBR article by Johansson tells how Mick Pearce designed the Eastgate offic... 17   9 comments List of 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 a... 16   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 - quest... 15   4 comments Three Types of Innovation (Christensen) 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 type... 14   How to Find Innovative Ideas? From Analogous Markets... When trying to find innovative ideas for your organization, several studies have revealed that it is highly valuable to access expertise from outside your area of expertise. This is - according to Fra... 14   3 comments 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 regul... 10   26 comments 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:... 10   34 comments The Hybrid Innovation Approach to Technological Innovation Companies need to carefully think about the timing and way to adopt technological disruptions. Adopting technological disruption too late can squander competitive advantages, but adopting it too early... 8   5 comments 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 don’... 7   14 comments Examples of Disruptive Innovation An article about the Cirque du Soleil I recently read made me wonder whether we should think of Cirque du Soleil as the iPhone or the Seiko of Circus… Let's take a look first at the difference betw... 7   6 comments

Expert Tips Advanced insights about Disruptive Innovation. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips Innovation Pitfalls Avoiding Innovation Traps Harvard Professor R. Moss Kanter describes 4 common innovation mistakes and corresponding remedies (HBR Nov 2006): 1. S... How to Find Good Product Ideas? List of 10 Approaches Discovering New-Product Ideas, Creative Approaches In his book “Product Leadership: Creating and Launching Superior New Products”, Robert Cooper suggests following ten way... 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 ... 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 The Internet age represents a huge challenge for most businesses. Why? Because the Internet, wireless devices such as m... Recent Innovation Trends | New Innovation Types Open innovation, User Innovation, Value Innovation, Bottom-up Innovation Roland Bel (2012) outlines and explains four types of innovations that have become more and more important since the las... 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 Think Differently in Innovation? How to Be Innovative, Innovative Thinking Strategy is always related with risk, due to market volatility. Also today´s volatility is increasing very fast. So inno... How to Design Experiments to Support Decision-making on Strategic Innovations Strategic Innovation, Strategic Decision-making, Strategic Experimenting, Experiments, Strategic Testing, Innovation Tes The probability of success of a major innovation is difficult to assess. Statistics and other datasets only provide info... Classes of Innovation | Sources of Innovation Innovation, Creativity, Organizational Innovativeness, Lateral Thinking, Out of the Box Thinking, Blue Ocean Strategy TWO CLASSES OF INNOVATION Innovation can be triggered or enabled by two broad classes: KNOWLEDGE PUSH: Innovation trig... Innovating by Reconsidering Value Delivery Fundamental Innovation When innovating their business model, companies need to reconsider their value proposition from all perspectives. One of... Creating Organizations to Produce Breakthrough Innovations Best Practices, Critical Factors, Creating an Organization to lead Radical Innovation Since 50 years, the Pentagon’s Defense Advanced Research Projects Agency (DARPA) has been very successful in producing a... How to Lead an Innovation Team Best Practices, Innovation Team Management In order to become a great innovation team leader, Ram Charan suggests in the article "P&G's Innovation Culture" (strate... What Makes a Company Innovative? Innovation Best Practices, R&D Best Practices, Corporate Innovation A futurethink 2006 Innovation Tracker Survey mentions: - Ability to create a climate that continuously fosters innovat... Big-Bang Disruption Technological Innovation BBD is a term coined by Accenture gurus Larry Drownes and Paul F. Numes. Technological innovation lately started out fr... Three Critical Capabilities in Developing a Strategic Corporate Disruptive Innovation Competence (Disruptive) Innovation Competence, Strategic Innovation Capability, Corporate Strategy, Innovation Leadership Skarzynski and Rufat-Latre (2011) discovered that the successes of disruptive innovators are driven by 3 critical capabi... Why Some Technology Revolutions Take Off and Others Don't Adoption of New Technologies Back in 1962, Thomas Kuhn wrote “Structure of Scientific Revolutions”, in which he suggested that the entrenched interes... Predecessor of Christensen Technology-driven Change Theory The theory of Disruptive Innovation was actually not created by Christensen. It was described by Thomas Hugues, MIT Pres... Designing Complex Products or Systems Through Iterative Rapid-cycle Prototyping Design Thinking, Disruptive Innovation, Blue Ocean Strategy, Introducing Complex Systems, Co-Creation Today, organizations are increasingly developing and designing new and complex products or systems. In other words, the ... How BOP Countries Can Disrupt Western Markets Disruptive Innovation, Bottom of the Pyramid, Country-level Strategy After the Second World War, Japan started to develop fast as a result of their disruptive innovation strategy. This disr... Misunderstandings on the Concept of Disruptive Innovations Technology Innovation In their paper “A Reflective Review of Disruptive Innovation Theory”, the authors mention three misunderstandings on the... Geographic Dimension to Explain Disruptive Innovation in Emerging Countries Disruptive Innovation in Emerging Countries In the past, it was generally thought that the Western countries were the main sources of innovation while developing co...

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 for Challengers and Latecomers Innovation by Challenger Firms, Latecomer Firms, Exploiting Weaknesses of Competitors 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 Innovation Management, Innovation Strategy This presentations is an introduction into the concepts of Innovations and Disruptive Technologies. The following sectio... Explained: How can Innovative Players Beat Large, Established Firms? Disruptive Innovation, Innovation Strategy, Competition, Innovators Dilemma, Market Segmentation, Sustaining Innovation How is it possible that small entrants with limited resources can successfully compete with large, established firms tha... Prof. Clay Christensen Explains Disruptive Innovation Innovation Strategy, Strategic Marketing, Research and Development, Strategic Vision According to Professor Clay Christensen, a "disruptive innovation" is NOT a breakthrough innovation that makes good prod... Design Thinking for Innovation Innovation, Entrepreneurship, Design Thinking, CSR, Social Entrepreneurship, Social Innovation This presentation is about design thinking and the connection to social entrepreneurship. The presentation includes the ... Disruptive Innovation: Why Market Leaders Fail Disruptive Innovation, Innovation Strategy, Strategic Innovation, Product Development, Disruptive Technology In this animated video Prof. Robert Perrons explains Prof. Clayton Christensen`s Theory of Disruptive Technologies and h... Strategic Innovation Leadership Leadership, Strategic Leadership, Innovation Management Presentation about Strategic Innovation Leadership that includes the following sections: 1. Strategic Innovation Leader... Distinctive vs. Dynamic Capabilities Inside-out Business Strategy In this presentation it is about Distinctive Capabilities and Dynamic Capabilities. Distinctive Capabilities are present... Disruptive Innovation Diagram Innovation Management Download and edit this 12manage PowerPoint graphic for limited personal, educational and business use. Republishing in ...

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