Taking Back Disruptive Innovation

Clayton Christensen is finally taking back disruption!

As I’ve written before, disruption is probably one of the most misused words in startup and innovation circles. Christensen first introduced the concept of disruptive innovation in his 1997 book, The Innovator’s Dilemma.

The idea has come under fire in recent years (most notably, from the New Yorker). However, most of these critics have missed the original point (did they even read the book?).

Philip Elmer-DeWitt of Fortune magazine does a good job of clarifying this point in his recent article, Why Apple, Tesla, and Uber Are Not ‘Disruptive’.

As Elmer-DeWitt summarizes, the basic tenets of disruptive innovation are:

  1. There’s a small, scrappy start-up that is taking on the big guys with a new business model.
  2. There’s a new class of low-end customers who are either over-served by established companies (that are always trying to please their best customers) or not being served at all.
  3. There’s a technological accelerant that gives the little guy an edge he can use to move up-market. By the time the big guys realize they’re in danger, it’s already too late.

“These are necessary conditions. If you don’t have all three, you don’t have technological disruption.”

Thus, the Apple iPhone is not disruptive innovation as Apple is not a scrappy, small start-up.

And, Tesla is not disruptive innovation as they entered the market from the high end (perhaps there is an interesting related theory for this example).

And Uber’s market is neither new nor over-served.

So, as opposed to disruptive innovation, these are all simply examples of companies entering an existing market with a better product.

Why does this matter?  As Christensen and co-author Michael Raynor have said:

“Applying the theory correctly is essential to realizing its benefits,” they write. “Small competitors that nibble away at the periphery of your business very likely should be ignored—unless they are on a disruptive trajectory, in which case they are a potentially mortal threat.”

Warning: count(): Parameter must be an array or an object that implements Countable in /usr/home/cautionmedia/public_html/ on line 405