Disruptive Innovation, a concept pioneered by Clayton Christensen, describes 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.
In his book, "The Innovator's Dilemma," Christensen showed that time and again almost all the organizations that have "died" or been displaced from their industries could see the disruption coming, but did nothing until it was too late.
Most good companies are on a path of sustaining innovations by catering to their most profitable customers. This leaves them open for disruptive technologies. This is because the established companies are designed to maximize profits through sustaining innovations.
When Disruptive Innovations emerge, established companies are unable to react quickly enough. They almost always go up-market rather than to defend these new or low-end markets, and ultimately the disruptive innovation improves, steals more market share, and replaces them.
Companies tend to innovate faster than their customers' needs evolve. Thus, they produce offerings too sophisticated, too expensive, and too complicated for many customers.
This presentation delves into the core elements of Disruptive Innovation, breaking down the model into digestible components. It highlights how incumbents often fail to respond effectively to disruptive threats, despite having the necessary capabilities. The PPT provides a nuanced understanding of why established companies are unable to defend against low-end market entrants, ultimately leading to their displacement.
The primer also outlines the limitations of the Disruptive Innovation model, emphasizing the need for a separate strategy process and a deep understanding of customer needs. It includes real-world examples of disrupted markets, offering valuable insights for executives aiming to navigate and leverage disruptive forces in their industries.
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Source: Best Practices in Innovation, Disruptive Innovation, Clayton Christensen PowerPoint Slides: Disruptive Innovation Primer PowerPoint (PPT) Presentation Slide Deck, LearnPPT Consulting
This PPT slide presents a clear comparison between disruptors and their corresponding disruptees across various industries. On the left, the disruptors include personal computers, mini mills, cellular phones, community colleges, discount retailers, and retail medical clinics. Each of these innovations has fundamentally altered the market dynamics of their respective sectors. For instance, personal computers have largely replaced mainframe and mini computers, while cellular phones have rendered fixed line telephony obsolete.
The right side of the slide lists the disruptees, which are traditional business models or services that have been significantly impacted by these innovations. Integrated steel mills, four-year colleges, full-service department stores, and traditional doctor’s offices represent the older paradigms that have struggled to compete against the more agile and cost-effective disruptors.
The bottom section outlines characteristics common to disruptive businesses. These include lower gross margins and smaller target markets, which may not initially attract attention from larger players. However, their simpler offerings often appeal to underserved segments, allowing them to gain traction and eventually challenge established competitors.
This slide serves as a vital resource for understanding how innovation reshapes industries. It emphasizes the importance of recognizing emerging trends and adapting strategies accordingly. For decision-makers, the insights provided here can inform strategic planning and investment decisions, ensuring that organizations remain relevant in a rapidly evolving market landscape.
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Disruption Frameworks
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