Disruptive Innovation Theory

• A process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors

• An innovation that is disruptive allows a whole new population of consumers at the bottom of market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill

• Low-end disruption refers to businesses that come in at the bottom of the market, generally the lower profit markets for the incumbent

• New-market disruption refers to businesses that compete against non-consumption in lower margin sectors of an industry

• Some examples of disruptive innovation include:

Personal computersMainframe and mini computers
Mini millsIntegrated steel mills
Cellular phonesFixed line telephony
Discount retailersFull-service department stores
Retail medical clinicsTraditional doctor’s offices

Source: Clayton Christensen, HBS Online

Vedang R. Vatsa

IT & Management Consultant