Disruptive innovation

Disruptive Innovation is a term in the field of business administration. It refers to 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.

Definition

The term Disruptive Innovation was defined and analyzed by the American scholar Clayton M. Christensen and his collaborators beginning in 1995, and has been called the most influential business idea of the early 21st century.

Characteristics

Disruptive innovations tend to be produced by outsiders and entrepreneurs in startups, rather than existing market-leading companies. 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 (which are needed to compete against current competition).

Examples

A prominent example of disruptive innovation is the cellular telephone, specifically those transitioning to digital from analog. The rapid scaling of the cellular telephone disrupted the incumbent telecommunications infrastructure.

Criticism

While the theory of disruptive innovation has been widely acknowledged in business circles, it has also attracted criticism. Some have argued that the theory lacks robust empirical support, while others have questioned the broad applicability of the theory.

See also

• Innovation
• Business model
• Entrepreneurship
• Technology lifecycle

References

Disruptive innovation Resources
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