Clayton Christensen coined the phrase "disruptive innovations" in the early 1990s when he was a professor at Harvard Business School. Many entities from Wall Street to Silicon Valley have used the phrase since, but it's often misused. The following clarifies Christensen's theory of disruptive technologies and three key things every innovator should know.
1. Technology that broadens a product's appeal
Sometimes the phrase "disruptive innovations" is used to mean "breakthrough technologies that improve products." But its original intent by Christensen was to refer to innovations that make products and services more affordable and available to a wider population. Music streaming platforms, for example, allow independent recording artists to put their products on the market at a lower cost than if they went through traditional distributors.
Christensen's "work to be done theory" suggests that consumers care most about what products and services do for them in terms of getting a job done. The key for an innovative product to be successful is to perform the tasks that consumers want done. He believes that basing a product on the job it gets done is a good defense against new market entrants aiming for disruption. Companies that only focus on product vs. product comparisons are limiting their view of how disruption works.
Computers are an example of market-creating innovations in the sense that they are much more affordable today to consumers than fifty years ago. Markets have expanded in the computer industry due to reaching beyond original target markets. The more technology can help people do more with less, the more it leads to further innovation and economic growth. Clayton believes there's room for disruption in the electric car market at a low price point for consumers.
2. Innovations that attract new customers
One of the characteristics of a disruptive innovation defined by Christensen is that of a business model that targets non-consumers. In that sense the target customer is the least profitable, since part of the goal is to undercut the market. It's a strategy that relies on higher volume of customers who are attracted to lower prices.
A fundamental point that Christensen makes in his influential 1997 book The Innovator's Dilemma is that large firms leave themselves vulnerable to smaller upstarts when they overlook the lower end of the market. Transistor radios of the 1950s were an example of disruptive technology of the era. They eventually overtook more expensive radios in sales due to aiming at the teen market.
3. Consistent, reliable network of suppliers
It's imperative that the innovator maintain a supply chain of reliable vendors and partners. Each entity in a supply chain has the potential to contribute to a strong, powerful system that disrupts an industry. Disruptive innovations further have the potential to strengthen the healthcare and education industries. This can have even further reaching value in empowering individuals.
The more a company works with vendors that help cut costs and speed up productivity, the more it can streamline its supply chain and offer a more disruptive product or service. It's crucial that supply chain components are evaluated regularly since they help contribute to an operation's overall image. The weakest links in the supply chain should be replaced by more reliable players who meet deadlines and standards for accuracy at lower costs.
In order for a product or service to be considered a disruptive innovation it must use a system that creates greater affordability and access for the broader market. Companies open the door for competitors when they don't consider the lower end of the market where opportunities exist with consumers who want to participate. It's important to understand that many consumers aim for efficiency and want to get work done at the lowest possible price.