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A disruptive technology or disruptive innovation is a marketing term describing a technological innovation, product, or service that uses a "disruptive" strategy, rather than a "revolutionary" or "sustaining" strategy, to overturn the existing dominant technologies or status quo products in a market. Disruptive innovations can be broadly classified into low-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption, whereas a lower-end disruptive innovation is aimed at mainstream customers who were ignored by established companies. It has been systematically shown to the research community that most disruptive innovations are in a minority compared to revolutionary innovations which introduce an innovation of higher performance to the market. Examples of true disruptive innovations, ie. innovations that are lower in performance and lower cost, succeeding are rare. Occasionally, a disruptive technology comes to dominate an existing market by either filling a role in a new market that the older technology could not fill (as cheaper, lower capacity but smaller-sized flash memory is doing for personal data storage in the 2000s) or by successively moving up-market through performance improvements until finally displacing the market incumbents (as digital photography has begun to replace film photography).
By contrast, a "revolutionary technology" introduces products with highly improved new features into the market. This is the innovation that most often replaces the incumbent. In addition, a "sustaining technology or innovation" improves product performance of established products. Sustaining technologies are often incremental; however, they can also be radical or discontinuous.
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The term disruptive technology was coined by Clayton M. Christensen and introduced in his 1995 article Disruptive Technologies: Catching the Wave, which he coauthored with Joseph Bower. The purpose of the book is aimed at managing executives who make the funding/purchasing decisions in companies rather than the research community. He describes the term further in his 1997 book The Innovator\'s Dilemma. In his sequel, The Innovator\'s Solution, Christensen replaced disruptive technology with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is the strategy or business model that the technology enables that creates the disruptive impact. The concept of disruptive technology continues a long tradition of the identification of radical technical change in the study of innovation by economists, and the development of tools for its management at a firm or policy level.
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.
"Low-end disruption" occurs when the rate at which products improve exceeds the rate at which customers can adopt the new performance. Therefore, at some point the performance of the product overshoots the needs of certain customer segments. At this point, a disruptive technology may enter the market and provide a product which has lower performance than the incumbent but which exceeds the requirements of certain segments, thereby gaining a foothold in the market.
In low-end disruption, the disruptor is focused initially on serving the least profitable customer, who is happy with a good enough product. This type of customer is not willing to pay premium for enhancements in product functionality. Once the disruptor has gained foot hold in this customer segment, it seeks to improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate. The incumbent will not do much to retain its share in a not so profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then finally the disruptive technology meets the demands of the most profitable segment and drives the established company out of the market.
"New market disruption" occurs when a product fits a new or emerging market segment that is not being served by existing incumbents in the industry. The Linux operating system (OS) when introduced was inferior in performance to other server operating systems like Unix and Windows NT. But the Linux OS is inexpensive compared to other server operating systems. After years of improvements it threatens to displace the leading commercial UNIX distributions.
| Disruptive Innovation | Displaced or Marginalized technology | Notes |
|---|---|---|
| Agriculture and Pastoralism | Hunting and gathering | Revolutionary innovation. Not a disruptive innovation as pastoralism is a much more productive technology than hunting. The development of food production technology led to other disruptive technologies such as cities, writing, metal working, wheeled vehicles, and much of the remainder of world civilization. |
| Hydraulic excavators | Cable-operated excavators | Hydraulic excavators were clearly innovative at the time of introduction but they gain widespread use only decades after. However, cable-operated excavators are still used in some cases, mainly for large excavations. |
| Mini steel mills | vertically integrated Steel mills | By using mostly locally available scrap and power sources these mills can be cost effective even though not large |
| Container ships and containerization | "Break cargo" ships and stevedores | In addition to efficiency these also provide a great reduction in opportunities for pilferage and integrate well with both rail and truck transport. |
| Desktop publishing | Traditional publishing | Early desktop-publishing systems could not match high-end professional systems in either features or quality. Nevertheless, they lowered the cost of entry to the publishing business, and economies of scale eventually enabled them to match, and then surpass, the functionality of the older dedicated publishing systems. |
| Digital photography | originally, instant photography, now increasingly all chemical photography | Early digital cameras suffered from low picture quality and resolution and long shutter lag. Quality and resolution are no longer major issues and shutter lag is much less than what it used to be. The convenience of small memory cards and portable hard drives that hold hundreds or thousands of pictures, as well as the lack of the need to develop these pictures, also helped. Digital cameras have a high power consumption (but several lightweight battery packs can provide enough power for thousands of pictures). Cameras for classic photography are stand-alone devices. |
| Semiconductors | vacuum tubes | A revolutionary innovation often falsely quoted as a disruptive technology. Systems built up with semiconductors require far less energy, are magnitudes of size smaller and more reliable than such with tubes. Semiconductor transistors revolutionized logic circuits upon its introduction by Shockley and Bardeen in the 1950s. |
| Minicomputers | Mainframes | Though mainframes survive in a niche market which persists to this day, minicomputers have themselves been disrupted into extinction. |
| Personal computers | Minicomputers, Workstations | Workstations still exist, but are increasingly assembled from high-end personal computer parts, to the point that the distinction is fading |
| High speed CMOS video sensors | Photographic film | When first introduced, high speed CMOS sensors were less sensitive, had lower resolution, and cameras based on them had less duration (record time). The advantage of rapid setup time, editing in the camera, and nearly-instantaneous review quickly eliminated 16 mm high speed film systems. CMOS-based cameras also require less power (single phase 110 V AC and a few amperes of current vs. 208 V single, double and even triple phase cameras requiring 20-50 A for film cameras. Continuing advances have overtaken 35 mm film and are challenging 70 mm film applications. |
| Muskets | Crossbows, longbows and the Knight military unit | Though early muskets had less fire rate, range and accuracy than crossbows and longbows, firearms allowed essentially anyone to become an effective soldier with very little training. Earlier military units like bowmen and knights needed years of practice to master the skills. |
| Steamships | Sailing ships | The first steamships were deployed on inland waters where sailing ships were less effective, instead of on the higher profit margin seagoing routes. Hence steamships originally only competed in traditional shipping lines\' "worst" markets. |
| Telephones | Telegraphy | When Western Union infamously declined to purchase Alexander Graham Bell\'s telephone patents for $100,000, their highest-profit market was long-distance telegraphy. Telephones were only useful for very local calls. Short-distance telegraphy barely existed as a market segment, if at all. So Western Union\'s decision was quite understandable at the time. |
Not all technologies promoted as disruptive innovations have actually prospered as well as their proponents had hoped. However, some of these technologies have only been around for a few years, and their ultimate fate has not yet been determined.
Unresolved examples of technologies promoted as \'disruptive innovations\'
Disruptive technologies are not always disruptive to customers, and often take a long time before they are significantly disruptive to established companies. They are often difficult to recognize. Indeed, as Christensen points out and studies have shown, it is often entirely rational for incumbent companies to ignore disruptive innovations, since they compare so badly with existing technologies or products, and the deceptively small market available for a disruptive innovation is often very small compared to the market for the established technology.
Even if a disruptive innovation is recognized, existing businesses are often reluctant to take advantage of it, since it would involve competing with their existing (and more profitable) technological approach. Christensen recommends that existing firms watch for these innovations, invest in small firms that might adopt these innovations, and continue to push technological demands in their core market so that performance stays above what disruptive technologies can achieve.
Disruptive technologies, too, can be subtly disruptive, rather than prominently so. Examples include digital photography (the sharp decline in consumer demand for common 35mm print film has had a deleterious effect on free-riders such as slide and infrared film stocks, which are now more expensive to produce) and IP/Internet telephony, where the replacement technology does not, and sometimes cannot practically replace all of the non-obvious attributes of the older system (sustained operation through municipal power outages, national security priority access, the higher degree of obviousness that the service may be life-safety critical or deserving of higher restoration priority in catastrophes, etc).
This article is licensed under the GNU Free Documentation License. It uses material from Wikipedia
