Disruptive Innovation

Theories of Disruptive Innovation and Value Innovation

Introduction

The ability to keep up/ come up with innovation has been the most important factor for big business survival since the 19th century. Every business, established or entrant, greatly relies on its research and development department to come up with new innovation or to guide in the adoption of new innovation. Some innovations involve introduction of entirely new processes or products (disruptive innovations) while others add value onto the existing products/ processes to make them better (value innovation). Innovation is a key element of strategy. This paper discusses disruptive and value innovation with Google Inc. as the case in study.

Disruptive Innovation

Disruptive innovation is a term that was first coined by Harvard professor, Clayton Christensen. It refers to an innovation that creates a new market and value network which eventually disrupts and may displace the existing ones over time. The innovation is disruptive because it influences the market in an unexpected way, it is mostly brought in by new entrants and often causes the fall of established companies.

In his book, ‘The Innovator’s Dilemma,” Christensen describes how disruptive innovations cause great companies to fail. It is estimated that about 70% of the products introduced by incumbent companies in their markets fail mostly because the companies innovate faster than their customers’ lives change. This means that they come up with products that are too good and too expensive for their customers. The established companies can be viewed as bullying their way through the customers’ needs. By pursuing only ‘sustainable innovations,’ established companies unknowingly open the avenue for new entrants offering ‘disruptive innovations.’ Disruptive innovations are usually simpler, lower-cost and more convenient products and often target the customers left out by the innovation race of established companies (Christensen 1997).

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