The Controversy Of Disruptive Innovation

Disruption occurs when a smaller company with fewer resources successfully disrupts the business practices of an incumbent business. Disruptive innovation has brought success to countless companies. However, though it is effective, it can also be dangerous. This is because many theories on the subject are misunderstood or misapplied. Christenson believes this is because users tend to focus on the concepts created 20 years ago, rather than reading books and articles that have been published with refinements since that time. Many believe that disruption occurs any time an industry is shaken by an entrant but this is not true. Misunderstanding how disruptive innovation works creates criticism when the uninformed company fails while using this
Incumbents are so focused on their most successful segments that they do not notice or care much to see an entrant target their smaller, less profitable segments. Disruption occurs when mainstream customers begin to purchase the entrant’s products. This was the case with the integrated steel mills and the mini mills. Slowly but surely the mini mills took over production of the least profitable segments of the integrated steel mills. Over time the mini mills became more successful than the incumbent because they continued to move upmarket until little remained for the integrated mills to
The first is that disruption is a process. It focuses on getting the model right and not just the product and it takes time. This is why it tends to be overlooked by incumbents, much like Netflix and how Blockbuster did not expect them to put them out of business with their streaming capabilities. The second point is disruptors build business models that differ from an incumbent’s. The example given was the Apple iPhone. The phone was considered to be a sustaining innovation in the cellular phone industry. However, it became a disruptive technology in the laptop industry. Apple created applications that gave the user everything they needed from a laptop in the palm of their hand. The third point is that some disruptive innovations succeed and some don’t. It is important to understand that failing to enter a market does not mean the concept failed. Failure is not built into the definition of disruption. It is also important to remember that not all success comes from disruption, which is shown in the case of Uber. The final point is that the mantra “disrupt or be disrupted” can misguide us. Incumbents must understand that action is not always required when an entrant challenges the market. They should not reconfigure a profitable business until they are given reason to believe the entrant will have a significant impact on their current business operations. There is no need to try to solve a