The term “disruptive innovation,” coined by business consultant and author Clayton M. Christensen in 1995, means “a process by which a product of service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.”
Okay, but what does that actually mean? Can we have some examples?
This probably comes as no surprise, but historically, companies create innovations faster than their consumers adopt them. This usually ends up causing an excess in goods or services that are too complex and expensive for their audiences. Selling these luxury items or services creates a huge profit margin for a company, but it also leaves a space for new innovations to break in at the bottom of the market.
These new innovations may have smaller profit margins, a more narrow niche market, or a less complex technology, but they can become more advanced and sophisticated over time. As these new products and services find their space in the market, they may move in and take the place of previous market leaders. A disruptive innovation is born.
A Case of Disruptive Innovation
Still confusing? Let’s look at an historical example. When pocket calculators were invented, desktop calculators were much more popular. They had stellar computing performance. However, they were not portable. As pocket calculators started to become widespread, they proved to have worse computing performance, but they were portable, and thus, very convenient.
The use of pocket calculators became more popular, so more time and effort was spent researching and developing them. Additionally, pocket calculators were cheaper to manufacture and could be sold at a wider variety of retailers, whereas desktop calculators were expensive and had to be sold in specialty stores. These improvements allowed pocket calculators to take over the market space of most desktop calculators.
So, how does this translate into today’s innovations? What new products on the market may eventually be disruptive innovations? It is difficult to tell what will be tomorrow’s disruptive technology without being able to look into the future.
With the leaps and bounds 3D printing has made in the medical, manufacturing, and design fields in the past several years, it would be a safe bet to predict that 3D printing is going to shake things up in any number of industries.
Some more recent examples of disruptive innovation include Craigslist (stemming from classified ads), iTunes (stemming from record stores), and Uber (stemming from taxis.) Researching recent developments can help to predict what is coming in the near future, although sometimes disruptive innovations seem to come out of nowhere.
Another way to predict these innovations is to watch authority media surrounding this topic. TechCrunch hosts several conferences each year called TechCrunch Disrupt which “gather the best and brightest entrepreneurs, investors, hackers, and tech fans” for several events including a startup competition, a “Hackathon” where coders and developers have 24 hours to build something from scratch, and of course, some good ol’ panel discussions. Past winners of the Startup Battlefield include some rather prestigious names, including Dropbox and Mint.
Although disruptive innovation is a term that has surfaced in the past couple of decades, the underlying principle is something that has occurred for much longer than that. It is much better seen, studied, and understood in hindsight, although it can be anticipated if you are paying close enough attention.
Paying attention to trends in disruptive innovation can be important for product engineers, software developers, CEOs, marketing strategists, and inventors alike.