The Catalyst of Distruptive Innovation

English: 1.2 MB 2.88 MB floppy disk drive

Do you know what this is? (Photo credit: Wikipedia)

A colleague pointed me to this article on disruptive innovation and how businessman and author Clayton Christensen recognized how disruptive technologies really work: They don’t compete with the etablished technologies at the high end. Rather they attack the low-end (less expensive, and often less performing) and eventually supplant the high end by getting better and better.

Here’s a great quote from the article, entitled “Disruptive Genius.”:

The theory of disruptive innovation lies at the core of his success. It grows from the distinction between sustaining technologies and disruptive ones. The former produce incremental improvements in the performance of established products: disk drives, for example, might offer faster speeds and greater memory storage. In contrast, disruptive technologies are “innovations that result in worse product performance, at least in the near term,” he wrote in The Innovator’s Dilemma. Yet, “Ironically…it was disruptive technology that precipitated the leading [disk-drive] firms’ failure.”

He explains that disruptive products are typically “cheaper, simpler, smaller, and, frequently, more convenient to use.” They tend to reach new markets, enabling their producers to grow rapidly and—with technological improvements—to eat away at the market shares of the leading vendors. In his book, Christensen shows how, between 1975 and 1990, successive generations of disk-drive technologies—14-, 8-, 5.25-, 3.5-, and 2.5-inch drives—disrupted the markets of their predecessors, and then were themselves disrupted. When 8-inch drives emerged, for example, their smaller capacities held no interest for mainframe-computer manufacturers, the principal customers for 14-inch drives. But the smaller drives matched minicomputer-makers’ needs—and with annual gains in performance, they eventually made inroads into the mainframe market. A similar pattern recurred with 5.25-inch drives and desktop computers, 3.5-inch drives and laptop computers, and 2.5-inch drives and notebook computers. Established companies are “held captive by their customers,” in Christensen’s phrase, and so routinely ignore emerging markets of buyers who are not their customers.

It’s not the customers you have, its the customers you didn’t know you had who wanted something a bit different than what you were offering.

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