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Disruptive Innovation

Disruptive Innovation has been praised by business leaders across markets, small as well as large corporations. However, the concept is in danger of becoming irrelevant due to a broad misinterpretation. It is often described as being any situation in which an industry is shaken up, and previously successful incumbents become irrelevant or completely obsolete.

Nevertheless, if going back to one of the central pillars of disruptive innovation, the book “The Innovators Dilemma,” the theory is much more specific. The author, Clayton Christensen, is perceived as one of the most influential business thinkers on earth, for his academic contribution to the business world on disruptive innovation. 

His theory describes disruptive innovation as a process where a service or product enters a market from the bottom – Usually being more accessible in terms of price. From there, it moves upmarket by improving product and margins, where if it is successful, it will replace the established incumbents. It is possible for entrants to take over the market because the incumbents often are focusing on their most profitable customer segment, which they further were over-performing in.

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The approach between the Incumbent and the Entrant can be split into two types of innovation and strategic timeframes. The Incumbent is pursuing sustaining innovation that aims to satisfy customers’ current needs, which is a short-term strategy. The Entrant is pursuing disruptive innovation that evolves to satisfy customers’ future needs, which is a long-term strategy.

Nonetheless, the theory of Christensen is not the only recognized theory. There are further two theories which describe how to create disruptive innovation; the second is Incumbents disrupting incumbents by moving from one market to another market and the third is Incumbent, using their resources to disrupt the market.

Learn more about Clayton Christensen and his disruptive innovation framework in the following article.

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