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What Is Disruptive Innovation? Definition, Examples and Benefits

What Is Disruptive Innovation? Definition, Examples and Benefits

Entrepreneurs and start-up junkies always talk about the power of disruption, but we assume that the term is just a synonym for innovation. Since disruptive innovation has become synonymous with progress and everyone likes progress, many companies have tried to stylize themselves as disruptive from the very beginning. 

What is Disruptive Innovation? Definition

Disruptive innovation can be best described by the technology itself, as opposed to the process of market shock. In truly disruptive innovations, an unconventional product that revolutionizes the whole world and business’ approaches.

Disruptive innovation is also the process in which small companies with few resources are able to successfully challenge large companies.

In a business context, disruptive innovation is a new market that disrupts an existing market by displacing a market leader or product alliance. As disruptive innovations enter the mainstream, established companies are taking up new concepts and technologies to respond to competition.

At the very beginning, disruptive technology can be found at the bottom of the market, developing a bad reputation. This is because competitors are doing their best to suppress the product and bankrupt the idea to keep their businesses alive. But that’s not a new thing at all.

The History of Disruptive Innovation

The theory of disruptive innovation, introduced in 1995, has proved to be one of the most effective tools for thinking about growth – change driven by innovation. By postulating that there are two types of markets where disruptive innovation can begin, the theory becomes more powerful and viable. 

Disruptive innovation is an innovation that creates a new market value network or disrupts an existing market value network by displacing an established market leader or alliance. The concept of disruptive innovation arises from the study of innovations in companies, but can also be applied to nations. Disruptive innovation is not a newer concept, but has been in ecology for a long time. Although it is a term that has emerged in recent decades, the underlying principles are something that has been around for much longer. 

How to recognize a Disruptive Innovation – Features and Characteristics

A typical feature of disruptive innovation is that the product or service is often simpler than its contemporaries. For instance, the product is usually smaller, easier to approach and less complex than the products or services that are normally considered “innovative”. 

How to manage a Disruptive Innovation?

The most difficult part of managing a company, developing disruptive innovation is to stay alive. The full responsibility is in the hands of the CEO. The CEO must be confident in the uniqueness of the product, to be insistent, cunning, unscrupulous and insightful.

Once disruptive innovation is established, small-scale innovation is rapidly coming to its place and the real funding begins. At this point it becomes clear for the public that the product is positioned for success, allowing the creation of new markets, new business models, and new products and services. If innovation is sustained, customers will begin to look for cheaper and sometimes radical alternatives to meet their business needs, increasing the success of disruptive innovation even if it is seen as too frivolous.

Example of Disruptive Innovation: Uber

The example of Uber  is a great example of a disruptive innovation strategy that has paid off. As HBR’s article “The Defense of Routine Innovation” argues, this is because disruptive innovation will not get anywhere unless companies can sustain it with rapid improvements based on market responses and demand. Uber managed to become a game-changer for transport services and drivers.

Does Silicon Valley know what Disruprtive Innovation is?

Not all companies commonly known as disruptors actually meet the traditional definition of disruptive innovation. A prominent example of this error is the use of the term “disruptive innovation” to describe software that provides telemedicine services, for example. 

Disruptive innovation improves a product or service in a way demanded or expected by the market and quickly recognized as the best choice for the consumer.

Disruptive innovations show that consumers do not know what they need, want or miss.

It creates new products and markets and is often a new way of being more affordable and accessible to a larger population, opening up a whole new market.

Disruptive Innovation is not Sustainable Innovation

Disruption theory distinguishes disruptive innovation from what is called sustainable innovation. This updated theory focuses on recognizing disruptive innovation as a business model that enables new technologies, that is, disrupts the market. The practices and techniques that everyone uses, the things they say, and the qualities that reach the standard of mainstream customers, all of this is picked up by disruptive innovators, but not by mainstream customers. 

So at this point, you know what disruptive thinking is, and you know that disruptive innovation can lead to tremendous business growth. Hope this article inspires you to make a change!

 

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