Disruptive innovation, or the Darwin Theory of technology and business models, has changed the way of living in the past two decades. Disruptive Innovation, as the name suggests, is an innovation of technology or a business model, which disrupts the market of the existing technology to evolve to a new one. This term came into existence in 1997, when a Harvard professor and a well-known businessman, Clayton Christensen, penned it in his book, The Innovator’s Dilemma. Since then, it has been one of the major concepts attributed to the rise and fall of many companies in their respective markets, and has been anticipated to impact many more in the future. If one has to look back in time and see from where did the disruptive innovation in technology start, IBM’s creation of Personal Computers (PCs) to disrupt the market of mainframe computers and create a mass market for computers will be on top of the list.
A small example of the impact of disruptive innovation can be that of CD player, which a very common phenomenon was in the late 90’s. In the current scenario, most of the laptop manufacturers do not give a provision for CDs in their laptops. That era witnessed Sony’s tremendous market domination with its famous Walkman. But after the introduction of MP3 players and iPods, Sony lost a majority of its market. Currently, with online music podcasts and mobile applications, there remains a very little market for the iPods as well. Due to this disruption in the market, many major players in the music industries had to adopt new strategies to sell their music albums. However, this was not just restricted to the music industry; the entire entertainment sector was affected by these changes in the technology throughout this period. With the amount of innovation taking place in the market, one can only imagine what the future might bring to disrupt the existing one. Hence, it becomes important for the well-established companies to keep track of the disruptive innovation occurring in the market and strategize accordingly.
To disrupt the current model, an innovator must target a particular market segment and find loopholes that the large companies tend to overlook. There are many ways that disruptions occur in the current market scenario. Companies like Netflix, Uber and AirBnB exploited the existing market and changed the business model to focus on the low end customers. Whereas, companies such as IBM, Google and Amazon created a new market and targeted a whole new segment of customers to disrupt the business model of the established businesses. These two methodologies of disruptive innovation can be broadly classified as:
- Low-end Market Disruption
- New Market Disruption
Apart from these, there are plenty of other ways an innovator can use to disrupt the market. And not only in the IT and Technology field, there is an expectation that disruptive innovations will witness entrepreneurs invent new ways of delivering education and health-care for a fraction of the cost of current market leaders. But all we know as of now is that interesting times are ahead. Follow this thread to know more on ways to execute Disruptive Innovation effectively in the market and new updates in the field of Disruptive Innovations.
