Encyclopedia Monday, October 9, 2017 864 hits

Disruptive innovation

One of the more recent theories brings "disruptive warning" to organizations. Watch your back; and front! Two established sources describe these warnings as follows.

Harward Business Review

https://hbr.org/2015/12/what-is-disruptive-innovation

"“Disruption” describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others. Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality—frequently at a lower price. Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously. Entrants then move upmarket, delivering the performance that incumbents’ mainstream customers require, while preserving the advantages that drove their early success. When mainstream customers start adopting the entrants’ offerings in volume, disruption has occurred."

Clayton Christensen

http://www.claytonchristensen.com/key-concepts/

"Characteristics of disruptive businesses, at least in their initial stages, can include:  lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional performance metrics.  Because these lower tiers of the market offer lower gross margins, they are unattractive to other firms moving upward in the market, creating space at the bottom of the market for new disruptive competitors to emerge."

 

 

 

https://en.wikipedia.org/wiki/Disruptive_innovation

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