Disruptive innovation was a term coined by Professor Clayton Christensen (A US Scholar and Teacher) of the Harvard Business School in his 1997 book, ‘The Innovator’s Dilemma’. Professor Christensen said, in order for a business to be disruptive, it must gain a foothold in a low-end market (Christensen Institute, 2017). Disruptive innovation can be described as a specific way that smaller companies can outcompete, and probably even destroy bigger rivals in the same industry. Sometimes this could even be a corporate strategy to gain a foothold in industrial domination or a greater market share.
Over the past few decades, there have been several kinds of disruptive innovations that have changed markets globally, thus affecting our daily lives. For example the gratification of having cell phones to make phone calls at any given place to the time when we need only our cell phone as the single gadget replacing our camera, Walkman, recorder, alarm clock, torch, computer, telephone, TV and much more. These transformations have transitioned into our everyday lives (SEIER CAPITAL, 2017).
3.1 – Disruptive Innovation and Netflix?
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However, not all the businesses that are disruptive are innovative. Clayton Christensen has classified this in his article for the Harvard Business Review correcting the record on what he defines as true innovative disruptions (Fortune, 2017). As mentioned earlier, for a business to be disruptive, it must gain a foothold in a low-end market. When using a search engine to access information about disruption or innovation, one may come across different variations of disruption and innovation. There are 3 notably common types of disruptions. They
If you are searching for a definition for innovation you can find a number of different ones. Basically they all include the idea of creating something new. Referring this idea to business, the definition of Westland seems to be appropriate. It says an ‘innovation is a product or service with a bundle of features that is – as a whole – new in the market, or that is commercialised in some new way it opens up new users and consumer groups for it’ (Westland 2008, p. 6). According to that, innovations can occur for products, services, processes and business models (Stamm 2008). Beside these categories, there are three different levels of innovations, depending on the degree of novelty involved: incremental innovations are minor changes. When implementing these changes, something is done in a better way than it has been already done before, so there’s nothing significantly new. Substantial innovations are mid-level in significance both to customers and to the company (Tucker 2008). Radical innovations, also known as breakthrough innovations, transform the way you think and have a big impact on the company and the customers in a whole (Tucker 2008; Bessant & Tidd 2008).
Furthermore, the true significance of disruptive technology even in Christensen's conception of it is not its displacing of established products. Rather, it is a great means for enlarging and broadening markets and providing new functionality. And according to Utterbacks’ explanation: “The degree to which the market was expanded by the innovation seemed to be the strongest factor favouring new entrants”, a possible conclusion might be that this leads to a never-ending circle.
Clayton Christensen is responsible for the term, disruptive innovation in which the smaller, unassuming store comes out of no where and takes the lead, which in this case the disruptor is the off-price retailer, T.J. Maxx and the disruptee is the full-service department store in this case is Macy’s (Christensen, 2017).
“The Innovator’s Dilemma” describes Christensen’s theory of disruptive innovation. But, his theory isn’t essentially briefed as one would assume. Her opinion is that case studies (like disk-drive industry) were chosen by the author to demonstrate his perception, as well as subjectively distinct success metrics.
Describe a firm you think has been highly innovative. Which of the four types of innovation—radical, incremental, disruptive, or architectural—did it use? Did the firm use different types over time?
Disruptive technology brings about many opportunities for both innovation and productivity outputs, however it can also be a risk. It includes developments that create substantial change across the economy for most people and businesses, the impact of which causes significant costs to adjust to due to capital being made obsolete and workers becoming underutilised. Clayton Christensen is considered to be the world’s top expert on the concepts of disruption innovation and technology and according to him the ‘introduction of digital disruption offers a better alternative to the present approach for solving customer problems’. Digital disruption is redefining the norm, changing both markets and competitors around the world. Whilst it can be a positive change for
Netflix’s completed changed the movie renting industry. Netflix’s completely changed the movie renting industry. Netflix targeted Blockbuster customers who were inconvenienced by making two trips to blockbuster in a 24 hour period and also spent time to scan the stacks to find their movies of interest. Netflix online and mail distribution system was a way to scale Blockbuster’s barriers to entry, which is their network of stores. This is a great example of disruptive innovation as they targeted a market niche, one which has been neglected by the incumbent. Blockbuster was caught off guard by the innovation by Netflix
In Clayton Christensen’s Disruptive Innovation for Social Change he changes the term “social change disruption” into a catalytic innovation. Disruptive innovations challenge most industries by offering them simpler alternatives to their low-end customers. Catalytic innovation, however, can outdo the status quo by offering an acceptable solution to inadequately addressed social problems. Catalytic innovations are differentiated by its primary focus on social change on a national scale. For example, in the article mentions how Minneapolis health clinic, MinuteClinic is a catalytic innovation.
What Christensen means is that using the words “disruptive innovation” in a non-jargon way is very difficult, as even Uber, the company most pointed to by many as the epitome of a disruptive company cannot even be defined as disruptive. Perhaps he is implying that the misuse of certain words can be equated to jargon, such as when people in everyday conversation refer to Uber as a “disruptive” company. Because of this, Christensen believes that the mantra that commands: “Disrupt or be disrupted” can be very misleading. He advises corporate leaders of incumbent companies to not overreact to this mantra by trying to solve the problem before it is one. Christensen implies that overuse of this phrase requires incumbent businesses to be extra vigilant
Disruptive innovation is when there is now a way to serve the people or market that has not been previously served.
There are three critical elements of disruption (these were first identified in the book, The Innovator’s Dilemma and are illustrated in the chart at right): ● A rate of improvement that customers can fully use or absorb. This is represented by the dotted line. ● A rate of improvement that goes beyond what customers can fully use or absorb. The pace of technological progress almost always outstrips the ability of customers in any given tier of the market to use it, in part because companies keep striving to make better products that they can sell for higher profit margins to their most demanding, high-end customers. This rate of improvement is shown by the two solid lines in the chart. ● A distinction between sustaining and disruptive innovation. A sustaining innovation targets those demanding, high-end customers with better performance than previously available, whether that performance is an incremental improvement or a breakFor Additional Information on how to know whether your idea has disruptive potential, go to: http://my.summary.com
According to the Innovation Policy Platform, a radical or disruptive innovation is an “innovation that has a significant impact on a market and on the economic activity of firms in that market.” (Radical and incremental innovation, 2013, p. 1). From this definition, IBM is a prime example of a radical innovation. The Watson super computer has performed activities no other invention has before. IBM has gone through at least five radical changes in its environment such as
Innovation is what gives an organization the competitive advantage the business will need to be successful in the market. Innovations are ideas that can impact the strategy, process, products and services that an organization has to offer to its customers. Three organizations that have an enormous impact on innovation are United Parcel Service (UPS), Hewlett-Packard and The Coca-Cola Company.
Tidd et al (2000) states, “the innovation is a business process of revolving opportunity into new ideas and of putting these into widely used practice. In term of the nature, there are five major types of innovations: novelty, competence shifting, complexity, robust design and continuous improvement. While in term of the extent of change, innovations can be divided into incremental, radical and
Strange innovation methodologies, wanders into new markets or contrarian ways to deal with existing markets.