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 outlines 4 critical elements of the theory of Disruptive Innovation, a concept popularized by Clayton Christensen. Each element is visually represented in a puzzle format, emphasizing their interconnectedness.
The first element highlights that incumbents are on a continuous path of innovation. This suggests that established companies often focus on refining their existing products and services, which can lead to complacency. The second element points out that the pace of sustaining innovation can sometimes exceed customer needs. This indicates a potential disconnect where companies may innovate in ways that do not align with what customers actually want or require.
The third element states that incumbents possess the capability to respond to disruptive changes, but often fail to do so effectively. This reflects a common scenario where organizations have the resources and knowledge to adapt, but struggle with execution or decision-making. The fourth element illustrates that as a result of disruption, incumbents may flounder. This can lead to a loss of market share or relevance if they do not pivot in response to emerging threats.
The slide also hints at additional factors that may influence disruptive innovation, suggesting that the model is not exhaustive. This could imply that external variables, such as market dynamics or consumer behavior shifts, also play a significant role. Understanding these elements is crucial for any organization looking to navigate the complexities of innovation and market disruption effectively.
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