Types - Disruptive Innovation
From The Author
“The disruptive innovation theory points to situations in which new organizations can use relatively simple, convenient, low-cost innovations to create growth and triumph over powerful incumbents. The theory holds that existing companies have a high probability of beating entrant attackers when the contest is about sustaining innovations. But established companies almost always lose to attackers armed with disruptive innovations. . . Disruptive innovations introduce a new value proposition. They either create new markets or reshape existing markets” (Christensen, Anthony and Roth 1).
- Element Change - 0
- “Generally disruptive innovations were technologically straightforward, consisting of off the shelf components put together in a product architecture that was often simpler than prior approaches” (Christensen 2).
- Systems Change - 5
- See comment under “Elements”. They [disruptive innovations] offer a different package of attributes.
- Performance - 5
- Disruptive innovations tend to introduce products and services that are not as good as existing products and services.
- Benefit - 5
- Disruptive innovations offer other benefits - they are simpler, more convenient and less expensive (Christensen and Raynor 1).
- Target Customers - 5
- There are two types of disruptive innovations “low end” and “new market”. Low end disruptive innovations target those customers who stopped paying for further product improvements (overshot customers). New market disruptive innovations target those customers who lack the ability, wealth or access to conveniently and easily accomplish an important job for themselves (non-consumers) (Chrstensen, Anthony & Roth 1).
- Need Creation - 5
- In both types of innovations they are addressing unaddressed needs. In both cases they do not address the current customer’s needs. Instead, they tend to under perform. In the disk drive example given in the Innovator’s Dilemma, the incumbent’s customers were never interested in the disruptive innovation, until down the road when the disruptive innovation became good enough. Instead these innovations address the needs of non-consumers and over-served customers.
- Value Network/Industry Shakeup - 5
- Disruptive innovations disrupt industries. Incumbents either ignore or move up market when disruptive innovations are first introduced. Eventually, when the innovations meet the mainstream customer’s needs, then the entrants take over and incumbents crumble.
- To the extent that these innovations produce a new set of activities along the value chain, the procedures are dramatically altered. However, since many of these innovations are based on existing technologies the equipment and processes to produce the innovation are not that different.
- Disruption has a paralyzing effect on industry’s leaders. These firms became leaders because they knew how differentiate themselves through their activities. They optimized these activities toward producing better products and when presented with a disruptive innovation that requires a different set of activities, they are crushed under the weight of their own previously successful strategies. Disruptive innovations create a whole new value network that is geared to commercializing these inventions. They tend to include whole new distribution channels, although the suppliers in many cases are similar.
- Market Size & Growth - 5
- Initially the market size tends to be much smaller than the mainstream market. This is one of the reasons that entrants often win, as incumbents ignore or flee up market in the face of such a small market. Growth tends to be high.
1 Christensen, Anthony and Roth, Seeing What’s Next, Harvard Business Press, 2004
2 Christensen, The Innovators Dilemma, Harvard Business Press, p 15, 1997
3 Christensen and Raynor, The Innovators Solution, Harvard Business Press, p 34, 2003