Disruptive innovation

In business theory, a disruptive innovation is an innovation that creates a new

Types of Innovation[1]
market and value network and eventually disrupts an existing market and value
network, displacing established market-leading firms, products, and alliances.[2]
Sustaining
The term was defined and first analyzed by the American scholar Clayton M.
An innovation that does not
Christensen and his collaborators beginning in 1995,[3] and has been called the
significantly affect existing
most influential business idea of the early 21st century.[4]
markets. It may be either:
Not all innovations are disruptive, even if they are revolutionary. For example,
Evolutionary
the first automobiles in the late 19th century were not a disruptive innovation,
An innovation that
because early automobiles were expensive luxury items that did not disrupt the
improves a product in
market for horse-drawn vehicles. The market for transportation essentially
an existing market in
remained intact until the debut of the lower-priced Ford Model T in 1908.[5] The
ways that customers
mass-produced automobile was a disruptive innovation, because it changed the
are expecting (e.g., fuel
transportation market, whereas the first thirty years of automobiles did not.
injection for gasoline
Disruptive innovations tend to be produced by outsiders and entrepreneurs in engines, which
startups, rather than existing market-leading companies. The business displaced carburetors.)
environment of market leaders does not allow them to pursue disruptive
Revolutionary
innovations when they first arise, because they are not profitable enough at first
(discontinuous, radical)
and because their development can take scarce resources away from sustaining
An innovation that is
innovations (which are needed to compete against current competition).[6] A
unexpected, but
disruptive process can take longer to develop than by the conventional approach
nevertheless does not
and the risk associated to it is higher than the other more incremental or
affect existing markets
evolutionary forms of innovations, but once it is deployed in the market, it
(e.g., the first
achieves a much faster penetration and higher degree of impact on the
automobiles in the late
established markets.[7]
19th century, which
Beyond business and economics disruptive innovations can also be considered to were expensive luxury
disrupt complex systems, including economic and business-related aspects.[8] items, and as such very
few were sold)

Disruptive
Contents An innovation that creates a
new market by providing a
History and usage of the term
What is (isn't) disruptive innovation different set of values, which
ultimately (and unexpectedly)
Theory
overtakes an existing market
Disruptive technology
(e.g., the lower-priced,
High-technology effects
affordable Ford Model T,
Internal auditor response which displaced horse-drawn
Example of disruption carriages)
Examples
Potential opportunities
Potential threats
 See also
Notes
References
Further reading
External links

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,[9] which he cowrote with Joseph Bower. The article is aimed at management executives who
make the funding or purchasing decisions in companies, rather than the research community. He describes the term further in his
book The Innovator's Dilemma.[10] Innovator's Dilemma explored the cases of the disk drive industry (which, with its rapid
generational change, is to the study of business what fruit flies are to the study of genetics, as Christensen was advised in the
1990s[11]) and the excavating equipment industry (where hydraulic actuation slowly displaced cable-actuated movement). In his
sequel with Michael E. Raynor, The Innovator's Solution,[12] Christensen replaced the term disruptive technology with disruptive
innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character; rather, it is the
business model that the technology enables that creates the disruptive impact. 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. Christensen and Mark W. Johnson, who cofounded the management consulting firm Innosight, described the dynamics of
"business model innovation" in the 2008 Harvard Business Review article "Reinventing Your Business Model".[13] The concept
of disruptive technology continues a long tradition of identifying radical technical change in the study of innovation by
economists, and the development of tools for its management at a firm or policy level.

The term “disruptive innovation” is misleading when it is used to refer to a product or service at one fixed point, rather than to the
evolution of that product or service over time.

In the late 1990s, the automotive sector began to embrace a perspective of "constructive disruptive technology" by working with
the consultant David E. O'Ryan, whereby the use of current off-the-shelf technology was integrated with newer innovation to
create what he called "an unfair advantage". The process or technology change as a whole had to be "constructive" in improving
the current method of manufacturing, yet disruptively impact the whole of the business case model, resulting in a significant
reduction of waste, energy, materials, labor, or legacy costs to the user.

In keeping with the insight that what matters economically is the business model, not the technological sophistication itself,
Christensen's theory explains why many disruptive innovations are not "advanced technologies", which a default hypothesis
would lead one to expect. Rather, they are often novel combinations of existing off-the-shelf components, applied cleverly to a
small, fledgling value network.

Online news site TechRepublic proposes an end using the term, and similar related terms, suggesting that it is overused jargon as
of 2014.[14]

What is (isn't) disruptive innovation

Disruption is a process, not a product or service, that occurs from the fringe to mainstream
Originate in low-end (less demanding customers) or new market (where none existed) footholds
New firms don't catch on with mainstream customers until quality catches up with their standards
Success is not a requirement and some business can be disruptive but fail
New firm's business model differs significantly from incumbent[15]
Christensen continues to develop and refine the theory and has accepted that not all examples of disruptive innovation perfectly
fit into his theory. For example, he conceded that originating in the low end of the market is not a cause of disruptive innovation,
but rather it fosters competitive business models, using Uber as an example. In an interview with Forbes magazine he stated:

"Uber helped me realize that it isn’t that being at the bottom of the market is the causal mechanism, but that it’s
correlated with a business model that is unattractive to its competitor"[16]

Theory
The current theoretical understanding of disruptive innovation is different from what might be expected by default, an idea that
Clayton M. Christensen called the "technology mudslide hypothesis". This is the simplistic idea that an established firm fails
because it doesn't "keep up technologically" with other firms. In this hypothesis, firms are like climbers scrambling upward on
crumbling footing, where it takes constant upward-climbing effort just to stay still, and any break from the effort (such as
complacency born of profitability) causes a rapid downhill slide. Christensen and colleagues have shown that this simplistic
hypothesis is wrong; it doesn't model reality. What they have shown is that good firms are usually aware of the innovations, but
their business environment does not allow them to pursue them when they first arise, because they are not profitable enough at
first and because their development can take scarce resources away from that of sustaining innovations (which are needed to
compete against current competition). In Christensen's terms, a firm's existing value networks place insufficient value on the
disruptive innovation to allow its pursuit by that firm. Meanwhile, start-up firms inhabit different value networks, at least until the
day that their disruptive innovation is able to invade the older value network. At that time, the established firm in that network
can at best only fend off the market share attack with a me-too entry, for which survival (not thriving) is the only reward.[6]

In the technology mudslide hypothesis, Christensen differentiated disruptive innovation from sustaining innovation. He explained
that the latter's goal is to improve existing product performance.[17] On the other hand, he defines a disruptive innovation as a
product or service designed for a new set of customers.

Generally, disruptive innovations were technologically straightforward, consisting of off-the-shelf components

put together in a product architecture that was often simpler than prior approaches. They offered less of what
customers in established markets wanted and so could rarely be initially employed there. They offered a different
package of attributes valued only in emerging markets remote from, and unimportant to, the mainstream.[18]

Christensen also noted that products considered as disruptive innovations tend to skip stages in the traditional product design and
development process to quickly gain market traction and competitive advantage.[19] He argued that disruptive innovations can
hurt successful, well-managed companies that are responsive to their customers and have excellent research and development.
These companies tend to ignore the markets most susceptible to disruptive innovations, because the markets have very tight profit
margins and are too small to provide a good growth rate to an established (sizable) firm.[20] Thus, disruptive technology provides
an example of an instance when the common business-world advice to "focus on the customer" (or "stay close to the customer",
or "listen to the customer") can be strategically counterproductive.

While Christensen argued that disruptive innovations can hurt successful, well-managed companies, O'Ryan countered that
"constructive" integration of existing, new, and forward-thinking innovation could improve the economic benefits of these same
well-managed companies, once decision-making management understood the systemic benefits as a whole.

Christensen distinguishes between "low-end disruption", which targets customers who do not need the full performance valued by
customers at the high end of the market, and "new-market disruption", which targets customers who have needs that were
previously unserved by existing incumbents.[21]
"Low-end disruption" occurs when the
rate at which products improve
exceeds the rate at which customers
can adopt the new performance.
Therefore, at some point the
performance of the product overshoots
the needs of certain customer
segments. At this point, a disruptive
technology may enter the market and
provide a product that has lower
performance than the incumbent but
that exceeds the requirements of
certain segments, thereby gaining a
foothold in the market.

In low-end disruption, the disruptor is

focused initially on serving the least
profitable customer, who is happy How low-end disruption occurs over time.
with a good enough product. This type
of customer is not willing to pay
premium for enhancements in product functionality. Once the disruptor has gained a foothold in this customer segment, it seeks to
improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to
pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate. The incumbent will not
do much to retain its share in a not-so-profitable segment, and will move up-market and focus on its more attractive customers.
After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then,
finally, the disruptive technology meets the demands of the most profitable segment and drives the established company out of
the market.

"New market disruption" occurs when a product fits a new or emerging market segment that is not being served by existing
incumbents in the industry. Some scholars note that the creation of a new market is a defining feature of disruptive innovation,
particularly in the way it tend to improve products or services differently in comparison to normal market drivers.[22] It initially
caters to a niche market and proceeds on defining the industry over time once it is able to penetrate the market or induce
consumers to defect from the existing market into the new market it created.[22]

The extrapolation of the theory to all aspects of life has been challenged,[23][24] as has the methodology of relying on selected
case studies as the principal form of evidence.[23] Jill Lepore points out that some companies identified by the theory as victims
of disruption a decade or more ago, rather than being defunct, remain dominant in their industries today (including Seagate
Technology, U.S. Steel, and Bucyrus).[23] Lepore questions whether the theory has been oversold and misapplied, as if it were
able to explain everything in every sphere of life, including not just business but education and public institutions.[23]

Disruptive technology
In 2009, Milan Zeleny described high technology as disruptive technology and raised the question of what is being disrupted. The
answer, according to Zeleny, is the support network of high technology.[25] For example, introducing electric cars disrupts the
support network for gasoline cars (network of gas and service stations). Such disruption is fully expected and therefore effectively
resisted by support net owners. In the long run, high (disruptive) technology bypasses, upgrades, or replaces the outdated support
network. Questioning the concept of a disruptive technology, Haxell (2012) questions how such technologies get named and
framed, pointing out that this is a positioned and retrospective act.[26][27]

Technology, being a form of social relationship, always evolves. No technology remains fixed. Technology starts, develops,
persists, mutates, stagnates, and declines, just like living organisms.[28] The evolutionary life cycle occurs in the use and
development of any technology. A new high-technology core emerges and challenges existing technology support nets (TSNs),
which are thus forced to coevolve with it. New versions of the core are designed and fitted into an increasingly appropriate TSN,
with smaller and smaller high-technology effects. High technology becomes regular technology, with more efficient versions
fitting the same support net. Finally, even the efficiency gains diminish, emphasis shifts to product tertiary attributes (appearance,
style), and technology becomes TSN-preserving appropriate technology. This technological equilibrium state becomes
established and fixated, resisting being interrupted by a technological mutation; then new high technology appears and the cycle
is repeated.

Regarding this evolving process of technology, Christensen said:

The technological changes that damage established companies are usually not radically new or difficult from a
technological point of view. They do, however, have two important characteristics: First, they typically present a
different package of performance attributes—ones that, at least at the outset, are not valued by existing customers.
Second, the performance attributes that existing customers do value improve at such a rapid rate that the new
technology can later invade those established markets.[29]

The World Bank's 2019 World Development Report on The Changing Nature of Work[30] examines how technology shapes the
relative demand for certain skills in labor markets and expands the reach of firms - robotics and digital technologies, for example,
enable firms to automate, replacing labor with machines to become more efficient, and innovate, expanding the number of tasks
and products. Joseph Bower ([Link] explained the process of how
disruptive technology, through its requisite support net, dramatically transforms a certain industry.

When the technology that has the potential for revolutionizing an industry emerges, established companies
typically see it as unattractive: it’s not something their mainstream customers want, and its projected profit
margins aren’t sufficient to cover big-company cost structure. As a result, the new technology tends to get ignored
in favor of what’s currently popular with the best customers. But then another company steps in to bring the
innovation to a new market. Once the disruptive technology becomes established there, smaller-scale innovation
rapidly raise the technology’s performance on attributes that mainstream customers’ value.[32]

For example, the automobile was high technology with respect to the horse carriage; however, it evolved into technology and
finally into appropriate technology with a stable, unchanging TSN. The main high-technology advance in the offing is some form
of electric car—whether the energy source is the sun, hydrogen, water, air pressure, or traditional charging outlet. Electric cars
preceded the gasoline automobile by many decades and are now returning to replace the traditional gasoline automobile. The
printing press was a development that changed the way that information was stored, transmitted, and replicated. This allowed
empowered authors but it also promoted censorship and information overload in writing technology.

Milan Zeleny described the above phenomenon.[33] He also wrote that:

Implementing high technology is often resisted. This resistance is well understood on the part of active
participants in the requisite TSN. The electric car will be resisted by gas-station operators in the same way
automated teller machines (ATMs) were resisted by bank tellers and automobiles by horsewhip makers.
Technology does not qualitatively restructure the TSN and therefore will not be resisted and never has been
 resisted. Middle management resists business process reengineering because BPR represents a direct assault on
the support net (coordinative hierarchy) they thrive on. Teamwork and multi-functionality is resisted by those
whose TSN provides the comfort of narrow specialization and command-driven work.[34]

Social media could be considered a disruptive innovation within sports. More specifically, the way that news in sports circulates
nowadays versus the pre-internet era where sports news was mainly on T.V., radio, and newspapers. Social media has created a
new market for sports that was not around before in the sense that players and fans have instant access to information related to
sports.

High-technology effects
High technology is a technology core that changes the very architecture (structure and organization) of the components of the
technology support net. High technology therefore transforms the qualitative nature of the TSN's tasks and their relations, as well
as their requisite physical, energy, and information flows. It also affects the skills required, the roles played, and the styles of
management and coordination—the organizational culture itself.

This kind of technology core is different from regular technology core, which preserves the qualitative nature of flows and the
structure of the support and only allows users to perform the same tasks in the same way, but faster, more reliably, in larger
quantities, or more efficiently. It is also different from appropriate technology core, which preserves the TSN itself with the
purpose of technology implementation and allows users to do the same thing in the same way at comparable levels of efficiency,
instead of improving the efficiency of performance.[35]

As for the difference between high technology and low technology, Milan Zeleny once said:

The effects of high technology always breaks the direct comparability by changing the system itself, therefore
requiring new measures and new assessments of its productivity. High technology cannot be compared and
evaluated with the existing technology purely on the basis of cost, net present value or return on investment. Only
within an unchanging and relatively stable TSN would such direct financial comparability be meaningful. For
example, you can directly compare a manual typewriter with an electric typewriter, but not a typewriter with a
word processor. Therein lies the management challenge of high technology.[36]

However, not all modern technologies are high technologies. They have to be used as such, function as such, and be embedded in
their requisite TSNs. They have to empower the individual because only through the individual can they empower knowledge.
Not all information technologies have integrative effects. Some information systems are still designed to improve the traditional
hierarchy of command and thus preserve and entrench the existing TSN. The administrative model of management, for instance,
further aggravates the division of task and labor, further specializes knowledge, separates management from workers, and
concentrates information and knowledge in centers.

As knowledge surpasses capital, labor, and raw materials as the dominant economic resource, technologies are also starting to
reflect this shift. Technologies are rapidly shifting from centralized hierarchies to distributed networks. Nowadays knowledge
does not reside in a super-mind, super-book, or super-database, but in a complex relational pattern of networks brought forth to
coordinate human action.

Internal auditor response

Internal audit plays a critical role maintaining effective control mitigating emerging risks. Businesses will increase risk or bypass
opportunity if auditors do not address disruption-related risks.[37] Alles has discussed that Big Data is a disruptive innovation that
auditors must incorporate in practice.[38] A 2019 study, Internal Auditors' Response to Disruptive Innovation, reports on the
evolution of internal audit to react to changes. Disruptions examined include data analytics, agile processes, cloud computing,
robotic process automation, continuous auditing, regulatory change, and artificial intelligence.[39]

Example of disruption
In the practical world, the popularization of personal computers illustrates how knowledge contributes to the ongoing technology
innovation. The original centralized concept (one computer, many persons) is a knowledge-defying idea of the prehistory of
computing, and its inadequacies and failures have become clearly apparent. The era of personal computing brought powerful
computers "on every desk" (one person, one computer). This short transitional period was necessary for getting used to the new
computing environment, but was inadequate from the vantage point of producing knowledge. Adequate knowledge creation and
management come mainly from networking and distributed computing (one person, many computers). Each person's computer
must form an access point to the entire computing landscape or ecology through the Internet of other computers, databases, and
mainframes, as well as production, distribution, and retailing facilities, and the like. For the first time, technology empowers
individuals rather than external hierarchies. It transfers influence and power where it optimally belongs: at the loci of the useful
knowledge. Even though hierarchies and bureaucracies do not innovate, free and empowered individuals do; knowledge,
innovation, spontaneity, and self-reliance are becoming increasingly valued and promoted.[40]

Amazon Alexa, Airbnb are some other examples of disruption.

Uber is not an example of disruption because it did not originate in a low-end or new market footholds.[15] One of the conditions
for the business to be considered disruptive according to Clayton M. Christensen is that the business should originate on a) low-
end or b) new-market footholds. Instead, Uber was launched in San Franscisco, a large urban city with an established taxi service
and did not target low-end customers or created a new market (from the consumer perspective). In contrast, UberSELECT, an
option that provides luxurious cars such as limousine at a discounted price, is an example of disruption innovation because it
originates from low-end customers segment - customers who would not have entered the traditional luxurious market.

Examples
 Market
Disruptive
Category disrupted by Notes
innovation
innovation
Academia Wikipedia Traditional Traditional, for-profit general encyclopedias with articles
encyclopedias written by paid experts have been displaced by Wikipedia,
an online encyclopedia which is written and edited by
volunteer editors. Former market leader Encyclopædia
Britannica ended its print production after 244 years in
2012.[41] Britannica's price of over $1000, its physical size
of dozens of hard-bound volumes, its weight of over 100
pounds, its number of articles (about 120,000) and its
update cycles lasting a year or longer made it unable to
compete with Wikipedia, which provides free, online access
to over 5 million articles with most of them updated more
frequently.
Wikipedia not only disrupted printed paper encyclopedias; it
also disrupted digital encyclopedias. Microsoft's Encarta, a
1993 entry into professionally edited digital encyclopedias,
was once a major rival to Britannica but was discontinued
in 2009.[42] Wikipedia's free access, online accessibility on
computers and smartphones, unlimited size and instant
updates are some of the challenges faced by for-profit
competition in the encyclopedia market.

Communication Telephony Telegraphy When Western Union declined to purchase Alexander

Graham Bell's telephone patents for $100,000, their
highest-profit market was long-distance telegraphy.
Telephones were only useful at that time for very local calls.
Short-distance telegraphy barely existed as a market
segment, which explains Western Union's decision to not
enter the emerging telephone market. However, telephones
quickly displaced telegraphs, as telephones offered much
greater communication capacity than telegraphs.
Computer Minicomputers Mainframes Minicomputers were originally presented as an inexpensive
hardware alternative to mainframes and mainframe manufacturers
Personal Minicomputers, did not consider them a serious threat in their market.
computers workstations, Eventually, the market for minicomputers (led by Seymor
word Cray—daisy chaining his minisupercomputers) became
processors, much larger than the market for mainframes.
Lisp machines
Pocket 3.5 standard Equivalent computing performance and portable[10]
calculator calculator[1]
Digital Mechanical Facit AB used to dominate the European market for
calculator calculator calculators, but did not adapt digital technology, and failed
to compete with digital competitors.[43]
Smartphones Personal Smartphones and tablets are more portable than traditional
computers, PCs and laptops.
laptops, PDAs
Data storage 8 inch floppy 14 inch hard The floppy disk drive market has had unusually large
disk drive disk drive changes in market share over the past fifty years.
According to Clayton M. Christensen's research, the cause
5.25 inch 8 inch floppy of this instability was a repeating pattern of disruptive
floppy disk disk drive innovations.[44] For example, in 1981, the old 8 inch drives
drive (used in mini computers) were "vastly superior" to the new
3.5 inch floppy 5.25 inch 5.25 inch drives (used in desktop computers).[18]
disk drive floppy disk
drive
 CDs and USB Bernoulli drive However, 8 inch drives were not affordable for the new
flash drives and Zip drive desktop machines. The simple 5.25 inch drive, assembled
from technologically inferior "off-the-shelf" components,[18]
was an "innovation" only in the sense that it was new.
However, as this market grew and the drives improved, the
companies that manufactured them eventually triumphed
while many of the existing manufacturers of eight inch
drives fell behind.[44]

Display Light-emitting Light bulbs A LED is significantly smaller and less power-consuming
diodes than a light bulb. The first optical LEDs were weak, and
only useful as indicator lights. Later models could be used
for indoor lighting, and now several cities are switching to
LED street lights. Incandescent light bulbs are being
phased out in many countries. LED displays and AMOLED
are also becoming competitive with LCDs.
LCD LED CRT The first liquid crystal displays (LCD) were monochromatic
displays and had low resolution. They were used in watches and
other handheld devices, but during the early 2000s these
(and other planar technologies) largely replaced the
dominant cathode ray tube (CRT) technology for computer
displays and television sets.
CRT sets were very heavy, and the size and weight of the
tube limited the maximum screen size to about 38 inches;
in contrast, LCD and other flat-panel TVs are available in
40", 50", 60" and even bigger sizes, all of which weigh
much less than a CRT set. CRT technologies did improve
in the late 1990s with advances like true-flat panels and
digital controls; however, these updates were not enough to
prevent CRTs from being displaced by flat-panel LCD and
LED TVs.

Electronics Transistor Vacuum tube Vacuum tubes were the dominant electronic technology up
until the 1950s. The first transistor was invented by Bell
Labs in 1947, but was initially overlooked by radio
companies such as RCA up until the mid-1950s, when
Sony successfully commercialized the technology with the
pocket transistor radio, leading to transistors replacing
vacuum tubes as the dominant electronic technology by the
late 1950s.[45]
Silicon Germanium Up until the late 1950s, germanium was the dominant
semiconductor material for semiconductor devices, as it
was capable of the highest performance up until
then.[46][47] In the late 1950s, Mohamed M. Atalla
developed the process of silicon surface passivation by
thermal oxidation at Bell Labs.[48][49][47] This enabled
silicon to surpass the conductivity and performance of
germanium, and led to silicon replacing germanium as the
dominant semiconductor material, paving the way for the
silicon revolution.[47][50][51]
MOSFET Bipolar junction The bipolar junction transistor (BJT) was the dominant
transistor semiconductor device up until the 1960s.[52][53] In 1959,
Mohamed M. Atalla and Dawon Kahng invented the metal-
oxide-semiconductor field-effect transistor (MOSFET, or
MOS transistor) at Bell Labs, and demonstrated it in
 1960.[54] However, it was initially overlooked and ignored
by Bell Labs in favour of BJTs.[55] In the 1970s, the
MOSFET eventually replaced the BJT as the dominant
semiconductor technology.[52] As of 2018, the MOSFET is
the most widely manufactured device in history.[53]
Manufacturing Hydraulic Cable- Hydraulic excavators were clearly innovative at the time of
excavators operated introduction but they gained widespread use only decades
excavators after. However, cable-operated excavators are still used in
some cases, mainly for large excavations.[56]
Mini steel mills Vertically By using mostly locally available scrap and power sources
integrated steel these mills can be cost effective even though not large.[57]
mills
Plastic Metal, wood, Bakelite and other early plastics had very limited use - their
glass etc. main advantages were electric insulation and low cost.
New forms of plastic had advantages such as transparency,
elasticity and combustibility. In the early 21st century,
plastics can be used for many household items previously
made of metal, wood and glass.
Medical Ultrasound Radiography Ultrasound technology is disruptive relative to X-ray
(X-ray imaging) imaging. Ultrasound was a new-market disruption. None of
the X-ray companies participated in ultrasound until they
acquired major ultrasound equipment companies.[58]
Music and Digital Electronic Synthesizers were initially low-cost, low-weight alternatives
video synthesizer organ, electric to electronic organs, electric pianos and acoustic pianos. In
piano and the 2010s, synthesizers are significantly cheaper than
piano electric pianos and acoustic pianos, all while offering a
much greater range of sound effects and musical sounds.
Gramophone Pianola
Downloadable CDs, DVDs In the 1990s, the music industry phased out the vinyl
Digital media record single, leaving consumers with no means to
purchase individual songs. This market was initially filled by
illegal peer-to-peer file sharing technologies, and then by
online retailers such as the iTunes Store and [Link].
This low end disruption eventually undermined the sales of
physical, high-cost recordings such as records, tapes and
CDs.[59]

Streaming Video rental Video on demand software can run on many Internet-
video enabled devices. Since licensing deals between film
studios and streaming providers have become standard,
this has obviated the need for people to seek rentals at
physically separate locations. Netflix, a dominant company
in this market, was cited as a significant threat to video
stores when it first expanded beyond DVD by mail
offerings. The Netflix co-founders approached rental chain
Blockbuster LLC in 2000 trying to sell their company.
Blockbuster declined and ultimately ceased operation ten
years later.[60]
Photography Digital Chemical Early digital cameras suffered from low picture quality and
photography photography resolution and long shutter lag. Quality and resolution are
no longer major issues in the 2010s and shutter lag issues
have been largely resolved. The convenience of small
memory cards and portable hard drives that hold hundreds
or thousands of pictures, as well as the lack of the need to
develop these pictures, also helped make digital cameras
the market leader. Digital cameras have a high power
 consumption (but several lightweight battery packs can
provide enough power for thousands of pictures).
Cameras for classic photography are stand-alone devices.
In the same manner, high-resolution digital video recording
has replaced film stock, except for high-budget motion
pictures and fine art. The rise of digital cameras led
Eastman Kodak, one of the largest camera companies for
decades, to declare bankruptcy in 2012. Despite inventing
one of the first digital cameras in 1975, Kodak remained
invested in traditional film until much later.[61][62]

High speed Photographic When first introduced, high speed CMOS sensors were
CMOS image film less sensitive, had lower resolution, and cameras based on
sensors them had less duration (record time). The advantage of
rapid setup time, editing in the camera, and nearly-
instantaneous review quickly eliminated 16 mm high speed
film systems. CMOS-based digital cameras also require
less power (single phase 110 V AC and a few amps for
high-performance CMOS, direct current 5V or 3.3V and two
or three amps for low-power CMOS,[63] vs. 240 V single- or
three-phase at 20-50 A for film cameras). Continuing
advances have overtaken 35 mm film and are challenging
70 mm film applications.
Publishing Computer Offset printing Offset printing has a high overhead cost, but very low unit
printers cost compared to computer printers, and superior quality.
But as printers, especially laser printers, have improved in
speed and quality, they have become increasingly useful
for creating documents in limited issues.
Desktop Traditional Early desktop-publishing systems could not match high-end
publishing publishing professional systems in either features or quality, but their
impact was felt immediately as they lowered the cost of
entry to the publishing business. By the mid-1990s, DTP
had largely replaced traditional tools in most prepress
operations.
Word Typewriter The typewriter has been replaced with word processing
Processing software that has a wealth of functionality to stylize, copy
and facilitate document production.
Transportation Steamboats Sailing ships The first steamships were deployed on inland waters where
sailing ships were less effective, instead of on the higher
profit margin seagoing routes. Hence steamships originally
only competed in traditional shipping lines' "worst" markets.
Automobiles Rail transport At the beginning of the 20th century, rail (including
streetcars) was the fastest and most cost-efficient means of
land transportation for goods and passengers in
industrialized countries. The first cars, buses and trucks
were used for local transportation in suburban areas, where
they often replaced streetcars and industrial tracks. As
highways expanded, medium- and later long-distance
transports were relocated to road traffic, and some railways
closed down. As rail traffic has a lower ton-kilometer cost,
but a higher investment and operating cost than road traffic,
rail is still preferred for large-scale bulk cargo (such as
minerals). However, traffic congestion provides a bound on
the efficiency of car use, and so rail is still used for urban
passenger transport.
High speed Short distance In almost every market where high speed rail with journey
rail flights times of two hours or less was introduced in competition
with an air service, the air service was either greatly
 reduced within a few years or ceased entirely. Even in
markets with longer rail travel times, airlines have reduced
the amount of flights on offer and passenger numbers have
gone down. Examples include the Barcelona-Madrid high
speed railway, the Cologne Frankfurt high speed railway
(where no direct flights are available as of 2016) or the
Paris-London connection after the opening of High Speed
1. For medium-distance trips, like between Beijing &
Shanghai, the high speed rail and airlines often end up in
extremely stiff competition.
Private jet Supersonic The Concorde aircraft has so far been the only supersonic
transport airliner in extensive commercial traffic. However, it catered
to a small customer segment, which could later afford small
private sub-sonic jets. The loss of speed was compensated
by flexibility and a more direct routing (i.e. no need to go
through a hub). Supersonic flight is also banned above
inhabited land, due to sonic booms. Concorde service
ended in 2003.[64]

Potential opportunities
Major opportunities according to researchers and consultants

Idea Value Scope

Digital Transformation $100 Trillion Global[65]

Asteroid Mining $100 Trillion Global[66]

Open borders $78 Trillion Global[67]

Disruptive Technologies $14- $33 trillion Global[68][69]

E-Commerce[70] $22 Trillion Developing Countries

Wealth Management $22 Trillion Global[71]

Smart City Tech $20 Trillion Global[72]

Artificial Intelligence $15.7 trillion Global[73]

Climate Change Mitigation $7 Trillion Global[74]

Advancing Women's Equality $12 Trillion Global[75][76]

Free Trade $11 Trillion Global[77]

Circular Economy $4.5 Trillion Global[78]

Closing Gender pay Gap $2 Trillion OECD[79]

Longer Working Lives $2 Trillion OECD[80]

Empower Young Workforce $1.2 Trillion OECD[81]

Car Sharing $1 Trillion Global[82]

Potential threats
 Threat At Risk Scope

Drug resistant infections $100 Trillion Global[83]

Traffic Congestion $2.8 Trillion US[84]

See also
Blue Ocean Strategy
Creative destruction
Culture lag
Digital Revolution
Embrace, extend, extinguish
Hype cycle
Killer application
Leapfrogging
List of emerging technologies
Obsolescence
Pace of innovation
Paradigm shift
Product lifecycle
Technology readiness level (NASA)
Technology strategy
Creative disruption

Notes
1. Christensen 1997, p. xviii. Christensen describes as "revolutionary" innovations as "discontinuous" "sustaining
innovations".
2. Ab Rahman, Airini; et al. (2017). "Emerging Technologies with Disruptive Effects: A Review" ([Link]
[Link]/publication/321906585). PERINTIS eJournal. 7 (2). Retrieved 21 December 2017.
3. Bower, Joseph L. & Christensen, Clayton M. (1995)
4. Bagehot (15 June 2017). "Jeremy Corbyn, Entrepreneur" ([Link]
ours-leader-has-disrupted-business-politics-jeremy-corbyn-entrepreneur). The Economist. p. 53. Retrieved
23 June 2017. "The most influential business idea of recent years is Clayton Christensen’s theory of disruptive
innovation."
5. Christensen 2003, p. 49.
6. Christensen 1997, p. 47.
7. Assink, Marnix (2006). "Inhibitors of disruptive innovation capability: a conceptual model". European Journal of
Innovation Management. 9 (2): 215–233. doi:10.1108/14601060610663587 ([Link]
0610663587).
8. Durantin, Arnaud; Fanmuy, Gauthier; Miet, Ségolène; Pegon, Valérie (1 January 2017). Disruptive Innovation in
Complex Systems. Complex Systems Design & Management. pp. 41–56. doi:10.1007/978-3-319-49103-5_4 (htt
ps://[Link]/10.1007%2F978-3-319-49103-5_4). ISBN 978-3-319-49102-8.
9. Bower, Joseph L. & Christensen, Clayton M. (1995). However the concept of new technologies leading to
wholesale economic change is not a new idea since Joseph Schumpeter adapted the idea of creative destruction
from Karl Marx. Schumpeter (1949) in one of his examples used "the railroadization of the Middle West as it was
initiated by the Illinois Central". He wrote, "The Illinois Central not only meant very good business whilst it was
built and whilst new cities were built around it and land was cultivated, but it spelled the death sentence for the
[old] agriculture of the West."Disruptive Technologies: Catching the Wave" Harvard Business Review, January–
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11. Christensen 1997, p. 3.
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References
Anthony, Scott D.; Johnson, Mark W.; Sinfield, Joseph V.; Altman, Elizabeth J. (2008). Innovator's Guide to
Growth - Putting Disruptive Innovation to Work. Harvard Business School Press. ISBN 978-1-59139-846-2.
Daniele Archibugi, Blade Runner Economics: Will Innovation Lead the Economic Recovery? ([Link]
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Christensen, Clayton M., Bohmer, Richard, & Kenagy, John. (2000). "Will Disruptive Innovations Cure Health
Care?" Harvard Business Review, September 2000.
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[Link]/details/innovatorssoluti00chri). Harvard Business Press. ISBN 978-1-57851-852-4.
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seeingwhatsnextu00chri). Harvard Business School Press. ISBN 978-1-59139-185-2.
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Further reading
Danneels, Erwin (2004). "Disruptive Technology Reconsidered: A Critique and Research Agenda" ([Link]
[Link]/web/20060112094226/[Link] (PDF).
Journal of Product Innovation Management. 21 (4): 246–258. doi:10.1111/j.0737-6782.2004.00076.x ([Link]
org/10.1111%2Fj.0737-6782.2004.00076.x). Archived from the original ([Link]
ws/lv4/danneels_disruptive.pdf) (PDF) on 2006-01-12.
Danneels, Erwin (2006). "From the Guest Editor: Dialogue on The Effects of Disruptive Technology on Firms and
Industries". Journal of Product Innovation Management. 23 (1): 2–4. doi:10.1111/j.1540-5885.2005.00174.x (http
s://[Link]/10.1111%2Fj.1540-5885.2005.00174.x).
Roy, Raja (2014). "Exploring the Boundary Conditions of Disruption: Large Firms and New Product Introduction
With a Potentially Disruptive Technology in the Industrial Robotics Industry". IEEE Transactions on Engineering
Management. 61 (1): 90–100. doi:10.1109/tem.2013.2259590 ([Link]
Roy, Raja; Cohen, S.K. (2015). "Disruption in the US machine tool industry: The role of inhouse users and pre-
disruption component experience in firm response". Research Policy. 44 (8): 1555–1565.
doi:10.1016/[Link].2015.01.004 ([Link]
Weeks, Michael (2015). "Is disruption theory wearing new clothes or just naked? Analyzing recent critiques of
disruptive innovation theory" Innovation: Management, Policy & Practice 17:4, 417-428.
[Link]

External links
 Peer-reviewed chapter on Disruptive Innovation by Clayton Christensen ([Link]
opedia/disruptive_innovation.html) with public commentaries by notable designers like Donald Norman
The Myth of Disruptive Technologies ([Link] Note that
Dvorák's definition of disruptive technology describes the low cost disruption model, above. He reveals the
overuse of the term and shows how many disruptive technologies are not truly disruptive.
"The Disruptive Potential of Game Technologies: Lessons Learned from its Impact on the Military Simulation
Industry" ([Link] by Roger Smith in Research
Technology Management (September/October 2006)
Disruptive Innovation Theory ([Link]
Bibliography of Christensen’s "Theory of Disruptive Innovation" as it relates to higher education ([Link]
stensen-bibliography/)
What does Disruption mean? ([Link]
Diffusion of Innovations, Strategy and Innovations The D.S.I Framework ([Link]
odriguesGomes/Papers/663981/Diffusion_of_Innovations_Strategy_and_Innovations_The_D.S.I_Framework_to_
Executive_Guideline_Considering_Innovations_Products_and_Strategies_in_order_to_support_business_issue
s.The_Case_Havaianas_Sandals_in_Brazil) by Francisco Rodrigues Gomes, [Link] share research
CREATING THE FUTURE: Building Tomorrow’s World ([Link]
morrows-world)
Lecture (video), VoIP as an example of disruptive technology ([Link]

Retrieved from "[Link]

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