Definition of Disruptive Technology

Definition Last Updated 08-Feb-2016 11:04

A disruptive technology is a novel capability1Originally described as a novel package in Disruptive Technologies – Catching the Wave (paywall) by Joseph Bower and Clayton Christensen in the Harvard Business Review. Note that a novel package does not necessarily imply fundamental technological novelty such as the use of graphen instead of silicon for transistors., offered by a business which does not – at the time of initial offering – compete directly in already well-defined business sectors or against specific established businesses, that is recognised2Typically through comparative assessment of performance trajectories as having the potential to achieve (or having already achieved), through subsequent sustaining innovation and general business activity3Sales, marketing, achievement of economies of scale, etc., a reshaping of the competitive landscape such that a significant fraction of the customer base of established businesses comes within its reach and incumbents are placed at a significant disadvantage by virtue of the novelty of the offering (and the attractiveness of its value proposition), which they cannot quickly or easily match. Disruptive technologies (or innovations) may be considered existential threats to established businesses.

Disruptive Technology or Disruptive Innovation is contrasted with Sustaining Innovation, which aims to deliver evolutionary and incremental improvements in value propositions to customers, and is driven by strong understanding of the past and the future needs of existing customers – as perceived by either the business or the customers themselves, or both.

Defined by a List of Criteria

A disruptive technology

  • is a novel capability (not necessarily including any fundamentally new technology)
  • offered by a business which does not – at the time of initial offering – compete directly in already well-defined business sectors or against specific established businesses
  • that has reshaped, or has the potential to reshape, the competitive landscape
  • through subsequent sustaining innovation (and other business activity)
  • such that a significant fraction of the customer base of established business comes within its reach
  • placing incumbents at a significant competitive disadvantage by virtue of the novelty of the offering (and the attractiveness of its value proposition)
  • which the incumbents cannot quickly or easily match
  • and which therefore presents an existential threat to established businesses

Scope

Disruptive technology is a defined term of Business Analysis. Disruptive technology is a defined term of Strategic Analysis.

Discussion

Article Last Updated 08-Feb-2016 11:04

The terms disruptive technology and disruptive innovation came to prominence in 1995 in the article Disruptive Technologies – Catching the Wave (paywall) by Joseph Bower and Clayton Christensen in the Harvard Business Review.

Drawing on the history of technological development in computing and computer storage (particularly the progression of disk drive sizes from 14″, to 8″, to 5.25″, 3.5″ and 1.8″ form-factors), the authors show how incumbents were both blindsided by others’ innovation and structurally incapable of responding in a timely and effective fashion once the threat was belatedly recognised.

They argue that disruptive innovation may be identified by examining the performance trajectory of a new capability and comparing it with that of the existing technology: if the innovation is likely to overtake the performance of an existing offering (even allowing for sustaining innovation in the existing offering) then the new capability may be disruptive.

Since disrupted business are often misled by strict adherence to the perceived needs of existing customers, which they attentively monitor, disruptive technology candidates may also be identified by disagreement about future product developments between non-technical management (especially sales and marketing) and technical specialists who may recognise alternative value propositions in a new technology.

Incumbents may seek to address disruptions by seeking to produce similarly novel offerings, but Bower & Christensen warn that anti-disruption activity should take place at arm’s length from the main business to avoid counterproductive internal competition for resources etc. (issues exacerbated by generally incompatible business models for novel vs. existing offerings), noting that (up to that time),

Every company that has tried to manage mainstream and disruptive businesses within single organization failed.

Notes   [ + ]

1.Originally described as a novel package in Disruptive Technologies – Catching the Wave (paywall) by Joseph Bower and Clayton Christensen in the Harvard Business Review. Note that a novel package does not necessarily imply fundamental technological novelty such as the use of graphen instead of silicon for transistors.
2.Typically through comparative assessment of performance trajectories
3.Sales, marketing, achievement of economies of scale, etc.

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