Disruptive Innovation, Clayton Christensen (1995)

“Disruptive Innovation” is a concept introduced by Clayton Christensen in his book titled “The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail” published in 1997 (first introduced in his earlier work “The Innovator’s Dilemma” published in 1995). The concept explores how disruptive technologies or business models can reshape entire industries and disrupt established companies.

Christensen’s research focused on the dynamics of technological and market change and how successful companies can falter when faced with disruptive innovations. He observed that established companies often excel at sustaining innovations, which involve incremental improvements to existing products or services aimed at satisfying existing customer needs. However, they struggle when faced with disruptive innovations that create new markets or serve different customer segments.

Disruptive innovations typically start as niche or low-end solutions that are initially seen as inferior to existing offerings in terms of performance or quality. However, they offer other advantages such as lower costs, simplicity, convenience, or accessibility that attract a different set of customers. Over time, disruptive innovations improve and gradually gain market share, eventually challenging and surpassing established companies in the industry.

Key elements of disruptive innovation include:

  • Technology or Business Model Disruption: Disruptive innovations can arise from advancements in technology or by introducing new business models that fundamentally change the way products or services are delivered, consumed, or monetized.
  • Market Segmentation: Disruptive innovations often target underserved or overlooked customer segments that are not adequately addressed by existing solutions. They provide an alternative that appeals to a different set of customers, often at a lower price point or with different features.
  • Iterative Improvement: Disruptive innovations may start as relatively basic or less capable solutions, but they continuously improve over time, gradually closing the performance gap with established offerings. This iterative improvement allows them to gain acceptance and capture larger market share.
  • Industry Transformation: Disruptive innovations can lead to the transformation of entire industries by reshaping market dynamics, challenging traditional business models, and creating new opportunities for growth.

Christensen’s concept of disruptive innovation has had a profound impact on the field of innovation and strategic management. It has helped explain why well-managed and successful companies can fail when faced with disruptive changes and how they can proactively respond to these challenges. The concept has influenced companies and entrepreneurs to embrace disruptive technologies and business models, encouraging them to continuously innovate and adapt to stay competitive in rapidly evolving markets.