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Disruptive Innovation

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Disruptive Innovation

Disruptive innovation is the introduction of new technologies, products or services by a firm in an effort to promote change and gain advantage over the competition. The word "disruptive " here does not mean to interrupt or cause disorder -- it means to replace. 

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The theory of disruptive innovation was first coined by Harvard professor Clayton M. Christensen in his research on the disk-drive industry and later popularized by his book The Innovator’s Dilemma, published in 1997. The theory explains the phenomenon by which an innovation transforms an existing market or sector by introducing simplicity, convenience, accessibility, and affordability where complication and high cost are the status quo. Initially, a disruptive innovation is formed in a niche market that may appear unattractive or inconsequential to industry incumbents, but eventually the new product or idea completely redefines the industry. (Clayton Christensen Institute 2015)

According to Constantinos Markides of London Business School, it is a “mistake” to simply apply Christensen’s original disruptive innovation theory to all forms of innovations. He believes that technological, business-model, and new-to-the world product innovations should be treated as distinct phenomena. All three types of innovation may follow a similar process to invade existing markets and may have equally disruptive effects on incumbent firms, but at the end of the day they produce different kinds of markets and have different managerial implications. It is only when the topic of disruptive innovation is broken down into these finer categories that progress can be made (Markides 2006, 24).

Business-model innovation is the discovery of a fundamentally different business model in an existing business. For example, Amazon and Barnes & Noble compete in the book retail business in fundamentally different ways. (Markides 2006, 20) Markides notes that business-model innovations—and in particular the process by which they emerge and grow—share many similarities with disruptive technological innovations, which Christensen’s (1997) original work examined. The similarities between the two have led some researchers to treat the two types of innovation as one and the same, but Markides holds that this is a mistake. (Markides 2006, 21)

A second type of innovation that tends to be disruptive to the established competitors is radical innovation, which creates new-to-the-world products (e.g., the car, television, personal computers, VCRs, mobile phones) (Markides 2006, 22)

References
Clayton Christensen Institute. “Disruptive Innovation.” Accessed June 27, 2015, http://www.christenseninstitute.org/key-concepts/disruptive-innovation-2/.

Markides, Constantinos. "Disruptive innovation: In need of better theory." Journal of product innovation management 23, no. 1 (2006): 19-25.

Page Created by: James Ban on 6 July 2015.


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