Disruptive Technology

Disruptive technology is an innovation that disrupts an existing market. Clayton Christensen who introduced the term defines it as:

“An innovation that is disruptive allows a whole new population of consumers access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.”

In the book, The Innovator’s Solution, (2003) the Christensen replaces “disruptive technology” with “disruptive innovation” arguing that it is not, in fact, the technology that disrupts the market but more the business process that was put in place to support the technology.

Disruptive innovations often destroy the incumbents within the market of which the technology was introduced. Take for example:

• The many ways to now watch films from the comfort of your own home… You can stream them via your Xbox or PS3 video gaming machines, you can stream them directly from your cable provider or you can stream them from your PC via numerous services that are now readily available on the Internet. All of these technologies have taken a hit on the DVD rental business with Blockbusters being a prime example.
• The multitude of methods to get up-to-date news and information via the Internet. You can use RSS (Really Simple Syndication) readers such as Google Reader (although now retired) or you can install news based applications both on your PC and on your smartphone device. This has all taken an effect on the newspaper industry with many having to close up.
• Apple’s iTunes technology (legal) and an eased ability to share media with one another (illegal if the material has copyright) has completely transformed the recording industry. Shops that sold recording media: CDs, DVDs, etc. have either closed or are struggling to grasp a share of an already dominated digital media download market.
• How Ford’s Model T in 1908 made high-speed motorized transportation available to many and ultimately replaced the horse and cart as a core method of transportation.

Disruptive technology can be classified as either:

Low-End Disruption

This targets customers who require fewer features, functionality or performance to that which is offered at the top end of the market.

An example would be 37 Signals Basecamp application, which offers a simple set of project management tools. These tools do not come close to the functionality offered by for example Microsoft Project, however, there is still a large set of customers who find the functionality offered by basecamp perfectly adequate for their needs.

Providers of low-end disruptive technology ultimately want to increase their market share and they do this by adding new incremental or sustaining innovations to their product or by simply adding more features. Over time due to the aforementioned changes the product may get more of the market and slowly squeeze the incumbents out of the market. At this point, the disruption may move to…

New Market Disruption

This targets customers who have requirements that are not being met by the markets existing incumbents.

An example would be the Linux operating system which when first introduced back in the early 1990s was quite basic in terms of performance and functionality. However, as time progressed, more and more features were added and the performance was improved so that today Linux has almost completely replaced Unix and is now installed in most of the world’s fastest supercomputers.