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Disruptive Innovation in the Digital Age

Disruptive Innovation in the Digital Age

When Clayton Christensen introduced the theory of disruptive innovation in 1995, he could not have anticipated how often the concept would be misused to explain innovations that were not actually disruptive. While it is not uncommon for people to refer to an idea as a disruptive innovation, Christensen was fairly specific about what elements must exist in order for something to be considered truly disruptive.

 
Christensen, Raynor and McDonald’s 2017 article titled “What is Disruptive Innovation?” states that a disruption typically involves an entrant company who exploits a particular area of the industry that current companies have overlooked due to a perceived lack of customer interest or lower profit margins. As a result of the established companies focusing their attention on serving their customer needs through incremental improvements in their products, an entrant company is often free to create new ways to deliver to this underserved market. These disrupters typically fill this overlooked market with a product that lacks many of the bells and whistles required by the current market but meets minimally acceptable quality thresholds.


In other words, disruptive offerings typically occur in industries where existing companies have ignored a portion of the market. With less profitable customers overlooked by existing companies, entrants are able to establish a new market that might not have existed before.

While Christensen’s original analysis lacked some clarity around explicit criteria for disruptive innovation, Kumaraswamy, Garud and Ansari elaborate on this definition in their 2018 article titled “Perspectives on Disruptive innovations.” They suggest that in light of the rapid innovation we are experiencing in this digital economy, businesses must create a different set of assessment criteria by which to judge these advances. They suggest a generative approach to assessing disruption including an early assessment of the platform, ecosystem, and co-opetition decisions, as well as considerations of evolutionary and relational performance standards.

In today’s business, it is not good enough to simply declare something as a disruptive innovation and apply the traditional business standards to address them. We need make a clear distinction between changes that are simply incremental improvements and those that are truly disruptive.

We often work with businesses and individuals to improve their offerings, automate systems and processes, expand feature sets, and launch new products. I find it useful for us to focus on the accurate meaning of disruptive innovation, as expressed by the individual who crafted the theory, as we seek to guide organizations in determining whether or not something is disruptive.

Even though a development may be innovative, that doesn’t necessarily mean it is disruptive. One example of this is creating software to support embedded IoT sensors to help Herman Miller make more informed decisions about space utilization. While this functionality distinguished the client within their industry, it does not meet standards to be considered disruptive.  

On the other hand, an organization like Moja that contracted us to help build a commerce system for sub-Saharan Africa is a disruptive innovation. When this idea was brought to us, my response was, “it is such a big idea, it just might work.” This product definitely has the ability to disrupt the way commerce is done on the continent, displacing much about how organizations conduct these transactions today.

Based on my experience working with businesses over the years, I have to agree with
Christensen’s assessment that too many changes within the economic construct are given the label of a disruptive innovation. A 2015 MIT Sloan Management article by King and Baatartogtokh concurs that for something to be considered a disruptive innovation, certain conditions should exist including a rapid improvement curve and the opportunity for these new advancements to outpace the needs of the consumer. This ultimately means that when something is heralded as a disruptive innovation, we should view this proclamation more as an alert as opposed to a predictor of things to come.

Written By

Mark Lardieri

Mark Lardieri is CEO at CQL where he focuses on strategy, finances and employee engagement opportunities for the business. In addition to work, Mark also enjoys coaching lacrosse and is completing his doctorate in organizational leadership.

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