Innovation

Explain christensens model of disruptive technology. What advice would you give a manager to help them identify and manage disruptive technology in the firm (2011)

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As companies tend to innovate faster than their customers’ needs evolve, most organizations eventually end up producing products or services that are actually too sophisticated, too expensive, and too complicated for many customers in their market

However, by doing so, companies unwittingly open the door to “disruptive innovations” at the bottom of the market. An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.

Disruptive innovation is often associated with entrepreneurs working at the fringes of a mainstream market and finding groups whose needs are not being met. Clayton Christensen describes disruptive technology as a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors. Christensen finds uniformly that the competitors firms monitor are the ones that are in the same technology and architecture. But the competitors that are most threatening will be those coming from the unexpected direction with a new architectural concept such as massive parallelism in computation (Afuah and Utterback, 1991).

Disruptive technologies are those that generally under-perform established products in mainstream markets, but they have other features that a few fringe and generally new customers value. Products based on disruptive technologies are typically cheaper, simpler, smaller and frequently more convenient to use.

Characteristics of disruptive businesses, at least in their initial stages, can include: lower gross margins, smaller target markets, and...