Disruptive Innovation

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Finding ideas for business ca be more difficult than it seems, because the market already seems overcrowded with products and services, and there are people who get paid to come up with new ideas and new methods of attracting customers. Furthermore, in an ever-globalizing economy, local markets are taken over by multinationals, concerns and major international corporations that have the money and resources to accomplish everything they want. That is why we thought of telling you about a less-known method of developing business ideas, which is disruptive innovation. The term, initially known as “disruptive technology”, was first used in 1995 by Clayton M. Christensen in an article entitled Disruptive Technologies: Catching the Wave.

The article was written for managing executives who take decisions concerning innovations, investments and purchases within a company. Later on, it was the same Christensen who changed the name to disruptive innovation because it could encompass a wider area of businesses and fields of activity, and not just those who deal with actual technology. Thus, disruptive innovation refers to innovations that help create a new market, thus disrupting an existing market and its value network. This process may last, of course, years or decades, and the term may refer to a new, innovative technology that displaces a previous technology; the innovation may be related to improving a product or service in unexpected ways.

What is interesting about the concept is the fact that often times it simply creates a new market, it creates a consumer for its product or service. That is why we were saying this information may be useful for those looking to start a new business. You may be sitting on an idea but you’re afraid to put it to practice because you think there will be no consumers for it; but with a smart strategy plan, good marketing and a unique approach you can create  market for yourself. There have been many cases of disruptive innovations so far, and while in the beginning they are usually quite expensive, as the market increases you have the possibility to reduce prices and satisfy everyone.

Another way of putting disruptive innovation into perspective is by comparing it with sustaining innovation, which only deals with innovating, developing and evolving existing markets. Another difference is that sustaining innovations are generally technological innovations, whereas disruptive innovations deal with changing entire markets. A good example is that the invention of automobiles was a revolutionary sustaining innovation, but not a disruptive one because not everyone could afford them so the market for horse and carriages wasn’t much affected.

Furthermore, disruptive innovation is generally the attribute of newly-established firms who invest directly in new technologies or the creation of new products and therefore new markets; as for well-established firms, while they are aware innovations take place, they cannot afford to invest in them immediately because they already invest a lot in existing markets, trying to keep up with competition.

There are both advantages and disadvantages to disruptive innovation companies; one disadvantage is that they must seek new customers, and they can’t compete with large companies that afford to invest in research and development and thus come up with a qualitative product for mainstream consumption. However, by creating something totally new and innovative, disruption attracts a different kind of customer, one that is focused on a certain issue and whose needs aren’t served by those large companies who are mainly focused on profit.

These are the basic concept involving disruptive technology, but for more information on the subject and guiding into how to apply this to create a successful business we recommend you to read Christensen’s article, as well as his subsequent book that expands the subject, The Innovator’s Dilemma. Before ending, let us give you some practical examples of products or services that were disrupted by innovation: CDs and DVDs were disrupted by downloadable digital media, USB flash drives were disrupted by cloud computing, traditional publishing by desktop publishing, chemical photography by digital photography, telegraphy by telephones, radiography by ultrasounds and traditional encyclopedias by Wikipedia.

June 2017
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