Disruptive technology

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A disruptive innovation is an innovation that disrupts an existing market. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically by lowering price or designing for a different set of consumers.

In contrast to "disruptive" innovation, a "sustaining" innovation does not have an effect on existing markets. Sustaining innovations may be either "discontinuous"[1] (i.e. "transformational") or "continuous" (i.e. "evolutionary"). Transformational innovations are not always disruptive. Although the automobile was a transformational innovation, it was not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles. The market for transportation essentially remained intact until the debut of the lower priced Ford Model T in 1908 by making higher speed, motorized transportation available to the masses.[2]

Contents

History and usage of the term

The term disruptive technologies was coined by Clayton M. Christensen and introduced in his 1995 article Disruptive Technologies: Catching the Wave[3], which he co-wrote with Joseph Bower. The article is aimed at managing executives who make the funding/purchasing decisions in companies rather than the research community. He describes the term further in his book The Innovator's Dilemma. (1997) In his sequel, The Innovator's Solution, (2003) Christensen replaced disruptive technology with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is the strategy or business model that the technology enables that creates the disruptive impact. The concept of disruptive technology continues a long tradition of the identification of radical technical change in the study of innovation by economists, and the development of tools for its management at a firm or policy level. However, Christensen's evolution from a technological focus to a business modelling focus is central to understanding the evolution of business at the market or industry level. For example, Christensen's contemporary emphasis on the applied business model rather than the technology itself was developed by Henry Chesbrough's pioneering notion of Open Innovation.

The theory

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