A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances.
2. Prepared By
Manu Melwin Joy
Assistant Professor
SCMS School of Technology and Management
Kerala, India.
Phone – 9744551114
Mail – manu_melwinjoy@yahoo.com
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3. Disruptive Innovation
• A disruptive innovation is
an innovation that creates a
new market and value
network and eventually
disrupts an existing market
and value network,
displacing established
market leading firms,
products and alliances.
4. Disruptive Innovation
• Not all innovations are
disruptive, even if they are
revolutionary. For example, the
first automobiles in the late 19th
century were not a disruptive
innovation, because early
automobiles were expensive
luxury items that did not disrupt
the market for horse-drawn
vehicles. The market for
transportation essentially
remained intact until the debut
of the lower-priced Ford Model T
in 1908.
5. Disruptive Innovation
• The mass-produced
automobile was a
disruptive innovation,
because it changed the
transportation market,
whereas the first thirty
years of automobiles did
not.
6. Disruptive Innovation
• The business environment of
market leaders does not
allow them to pursue
disruptive innovations when
they first arise, because they
are not profitable enough at
first and because their
development can take scarce
resources away from
sustaining innovations.
7. Disruptive Innovation
• A disruptive process can take
longer to develop than by the
conventional approach and
the risk associated to it is
higher than the other more
incremental or evolutionary
forms of innovations, but
once it is deployed in the
market, it achieves a much
faster penetration and higher
degree of impact on the
established markets.
8. Disruptive Innovation
• The term was coined by
Clayton M. Christensen and
defines a disruptive
innovation as a product or
service designed for a new
set of customers.
9. Disruptive Innovation
• Christensen argues that
disruptive innovations can
hurt successful, well-
managed companies that
are responsive to their
customers and have
excellent research and
development.
10. Disruptive Innovation
• Christensen distinguishes
between "low-end
disruption", which targets
customers who do not need
the full performance valued
by customers at the high end
of the market, and "new-
market disruption", which
targets customers who have
needs that were previously
unserved by existing
incumbents.
11. Examples
• Category – Academia.
• Disruptive innovation –
Wikipedia.
• Market disrupted by innovation -
Traditional encyclopaedias.
• Traditional, for-profit general
encyclopaedias with articles
written by paid experts have
been displaced by Wikipedia, an
online encyclopedia which is
written and edited by volunteer
editors.
12. Examples
• Category – Communication.
• Disruptive innovation – Personal
Computers.
• Market disrupted by innovation –
Minicomputers, work stations.
• Minicomputers were originally
presented as an inexpensive
alternative to mainframes and
mainframe manufacturers did
not consider them a serious
threat in their market.
13. Examples
• Category – Medical.
• Disruptive innovation –
Ultrasound.
• Market disrupted by innovation –
X-ray imaging.
• Ultrasound technology is
disruptive relative to X-ray
imaging. Ultrasound was a new-
market disruption. None of the
X-ray companies participated in
ultrasound until they acquired
major ultrasound equipment
companies.