How to Innovate Disruptively
A Not-So-Catchy Title for an Important Subject
Frequently, we encounter companies or products that are considered disruptive innovations.While firms strive for the magic gold ring of disruption, others are managing core competencies and making a tidy profit as well. So, what exactly is “disruptive innovation” and how do you transform your firm into a “disruptive” company?
Three models of technology development yield different methods of market encroachment in disruptive innovation. First, identifying a feature-heavy product may allow the firm to offer reduced technology yielding a lower cost, simpler, or more convenient product that is preferred by non-consumers. Reduced technology can grow the overall market by adding users to an industry that were previously unable to consume the product or service.
Second, a brand new technology is a disruptive innovation if it offers a new way to solve a customer’s problem or introduces a new service that was previously outside the range of existing technology. New technologies, such as e-readers, may result in market growth (e.g. number of people reading) and expand the way in which customers can consume the product.
Finally, advanced technologies are high end encroachments and improve the quality of products with better technologies. More powerful software that performs functions faster and with greater accuracy may at first disrupt and cannibalize sales of the highest margin customers but can also grow the potential market as the product trickles down to other market segments.
In this thought leadership paper, we will demystify disruptive innovation, drawing on the large body of work by Clayton Christensen to define disruption, to formulate a new business venture and compete disruptively, and to maintain the base business while growing a disruptive technology. We’ll also take a look at some alternative definitions of disruptive markets and leading criticisms of Christensen’s theories.
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