Disruptive Innovation - Approach For Today's Businesses

Disruptive Innovation - Approach For Today's Businesses

Today’s business world is extremely saturated. Pick any niche and you’ll see multiple companies fighting each other for dominance. When the markets are so competitive, a business needs to do something really unique to stand out. It needs to innovate, understand its potential customers, and cater to their wants even before they realise them; it needs to disrupt the market. And this sort of thinking isn’t anything new. Companies have been doing it for years without the fancy tag attached to it. They thought outside the box and they broke the rules; and in doing so, they created a unique and unassailable position for themselves in the market and in their customer’s lives.

A disruptive innovation is an innovation that creates a new market and value network and eventually disrupts an existing market and value network, displacing established market leading firms, products and alliances. The term was defined and phenomenon analyzed by Clayton M. Christensen and coworkers beginning in 1995. Since the early 2000s, “significant societal impact” has also been viewed as an aspect of disruptive innovation.

Disruptive innovations tend to be produced by outsiders and entrepreneurs, rather than existing market leading companies. The business environment of market leaders does not allow them to pursue disruptive innovations when they first arise, because they are not profitable enough at first and because their development can take scarce resources away from sustaining innovations (which are needed to compete against current competition). A disruptive process can take longer to develop than by the conventional approach and the risk associated to it is higher than the other more incremental or evolutionary forms of innovations, but once it is deployed in the market, it achieves a much faster penetration and higher degree of impact on the established markets.