Over 20 years ago Disruptive Innovation began to seep out of academia and into the business world. Disruptive Innovation is an academic theory that was first introduced by Clay Christensen in the Harvard Business Review. Since then, it has consumed the business community and more recently the media. The words "disruptive innovation" seem to be everywhere but ask 10 people what it is and you’re likely to get 15 different answers. Today, as part of the Deconstruct Series, we’ll be deconstructing disruptive innovation.
Deconstructing Disruptive Innovation
Disruption describes a process whereby a new entrant finds product/market fit with a inferior product that challenges an established incumbents existing market position. Here are couple signs to be on the look out for;
- Originates in low-end or new-market footholds
- Mainstream customers begin adopting when quality catches up to their standards
Disruptive Innovation theory is helpful to business leaders as a tool to help in framing strategic decisions. For instance, is a new competitor a threat at the low-end? If so, should we worry about that threat? Similarly, if the goal is to launch a new product or service, the theory can help in creating a scaffolding for entering a new market.
Things to consider when identifying a disruptive innovation;
- Is it breakthrough/sustaining innovation or disruptive innovation?
- Is it strategically significant?
- Is there an initial market?
Consider this when pursuing a it as an approach;
- Put the responsibility for building disruptive technology in an independent organization
- Keep the disruptive organization independent
- Not all initiatives are successful
“Disruptive Innovation is not 'breakthrough innovation' that makes good products a lot better.” - Clay Christensen
Disruptive Innovation gave rise to Innovators Dilemma, which evaluated what happens when business managers ignore these innovations focusing instead on their existing market at the expense of going after a new market. It also displayed cautionary tales of discounting a new technology or business as not valuable to existing customers and then later having to fend off the same technology or business.
MIT Professors Andrew King and Baljir Baatartogtokh have taken argument and suggest that additional factors, mainly legacy costs, changing scale economies and laws of probability are the causes for failure. The authors suggest managers calculate the value of winning, leverage existing capabilities, work collaboratively with other companies while employing a hybrid approach to addressing innovation.