Disruptive Innovation

You may hear when someone ask you for a "disruptive innovation"...well, no worry,  here you will find a resume of what is and how to find disruptive innovations for your company or ideas. Just keep calm and read about Disruptive innovation here:

History!

Disruptive Innovation is a theory with core concepts and within the last 20 years has been made essential refinements. First of all, it is a "type of innovation" that creates a new market and a new value network, that disrupt the current status quo. It was first introduced by Clayton M. Christensen in early 1995 with colleagues, and discuss the term further in his book The Innovator's Dilemma (1997). Later on, he replaced the term "disruptive technology" with "disruptive innovation" because finds that is the business model influence by technology that enables disruptive impact.

When Disruption happened?

Imagine successful Large Businesses with a product offered to "Mainstream customer" and "Most profitable customers" - but not to "Least profitable customers". On the other hand, a startup, with fewer resources and their own product targeting the "Least profitable customers" (or new market) with a more-suitable functionality at a lower price. Large businesses don't react aggressively as they are chasing "Most profitable customers". But then, Disruption happens! The startup moves to upmarket,  attending in volume the requirements of Large Businesses' "Mainstream customer."

So, Disruption is...

It is a process when small business knock out large business by taking off their main customers and within a product performance that starts from the low market (or a new one) to the most complex"

The Disruptive Innovation Model

Disruptive Innovation is a process (3), and can be explained in a model below. Happens when Entrant's (Startup) product performance trajectory with fewer resources target Least profitable segments (or new markets), neglected by Business incumbents (Large business), then other mainstream segments, until catches Business incumbent's mainstream customer with a more-suitable (answering the quality expected(2)) and with a cheaper product. 

Graphic: The Disruptive Innovation Model 

Source: "What is disruptive innovation?" (Clayton, M et al; 2015)

Key facts

1. Is only possible when they get started in Low-end footholds offering "good enough" products, or when starts with new-market footholds where none market existed. They turn "nonconsumers" in "consumers". (e.g.: In late 70s new challengers introduced personal copiers when usually only were copiers for large corporations)
2. It happens when quality catches up with mainstream customers, no before. Customers do not like their products not because is less expensive but because they wait until its quality rise enough to satisfy them.
3. Disruption is a process, and not a fixed point. 
4. Disrupters often (? - what is the source) build business models that are very different from those incumbents.
5. Some disruptive innovation succeeds, some don't.
6. Usually, companies practice "sustaining innovation", and this not necessarily means disruptive innovation. A better resolution tv, a new go-pro camera are some examples.
7. Evolves from the fringe to the mainstream, targetting the overlooked segments and gaining a foothold by delivering more-suitable functionality - usually at a lower price.
8. Disruptive technological Innovation eventually grow to dominate the market (Christensen, 2003)

So....how to do a Disruption?

By using a new or innovative technology that enables to deliver better products to overlooked customers (2). (Or perhaps as it is a process, it should be done by taking the accurate product performance trajectory until match large businesses' customers)

What is my opinion about the model?

The term "Disruptive innovation" seeded an unclear understanding by both academy and managers. Also, have not connected with other types of innovation as "Business-model innovation" and "Product Innovation" generating a gap of how they interact. Indeed these type have different competitive effects, produce different kinds of markets (Constantinos, 2006) and represents different challenges for business incumbents.  I would say that rather than a "type of innovation" based on a technology change or "business model change" it is a type of Innovation focus in the product performance trajectory over time.

On the other hand, start selling in the low market side, get the same customers from large business or democratize a product are singular characteristics that do not set a Disruptive Innovation. In addition,  it is not mentioned if the technology used for disruptive innovation must achieve a cheaper cost or not. It is mentioned as a character but with not any sure assumption. Finally, rather than new technologies, could be also new Business models?


Do the quiz!

So, if we understand all above we can answer the following questions:

Did Uber apply Disruptive Innovation? no, they don't apply fact 1, nor fact 2.
Did Netflix? yes, they foothold in the low-end market and then they upmarket.
Did Tesla? no, they foothold in the high end of the auto market. Missin fact 1 and 2 listed above.
Did Tambo? no, it is a sustaining innovation
Did Kola Real? no, it is a sustaining innovation
Did new cars? no, they were expensive luxury items that didn't disrupt the market for horse-drawn vehicles. However, the mass production of low-priced Ford Model T (1908) was a disruptive innovation (fact 1)

In this interview, I talk about some technological projects that (in my opinion) are disruptive innovations to respond to the threat of diseases caused by cold and frost in high Andean areas of Peru.

Sources:

(1) Christensen, C; Raynor, M; McDonald, R. (2015). What is disrupting innovation? Harvard Business Review.
(2) Rosamond Hutt (2016). What is Disruptive Innovation? World Economic Forum.
(3) Constantinos, M. (2006; 23:19-25). Disruptive Innovation: In need of Better theory? The Journal of Product Innovation Management.
(4) Christensen, C. and Raynor, M. (2003). The Innovator's Solution: Creating a sustaining successful growth. Harvard Business School Press.


Some concepts: 1. Business incumbents: predominant business in the market; 2. Mainstream customers: most important clients.