Why is Dr. Clayton Christensen’s Disruptive Innovation Theory Important for Your Business?
Disruption Innovation Theory is about growth and creation of shareholder value. It generates viral growth, often 20 times typical growth index averages. It causes a dramatic change in the market’s competitive playing field. Disruptive innovation challenges incumbents with inferior products, competes against non-consumption, and thereby creates a new dimension of value to the consumer. Disruptive innovation is not just about technology, but more importantly about the successful execution of the Business Model.
Disruption Innovation opportunities are predictable and have distinct signals or “disruption fingerprints”:
- Often an Inferior product/service to the incumbent alternatives
- Addresses an unserved or under-served market,
- Competes against consumer non-consumption
- Often targets small niche markets
- Customers are often unattractive to current market incumbents
- Designed for moderate to low growth markets
- Often disintermediates with traditional distribution channels
- Enjoys a sustainable cost of production advantage
- Product focuses on consumer advantages such as: ease of use, flexibility, simplicity and convenience
Disruption can be for low-end or high-end products. Low-end disruption targets micro market segments where consumers have opted out (non-consumers) with existing market products. Disruption is possible because in many mature markets, incumbent products exceed the true performance needs of customers. New market disruption focuses on the notion of inferiority based on the customers “job to be done”. New market disruption is superior to incumbent alternatives because it is based on a different set of customer values. It enables customers where previously impracticable before.
Key takeaways for your business:
- One of the best ways to find disruption is to focus on non-consumption.
- Disruption is predictable and should be integral part of your product planning and strategy development.
- You can engineer disruption; “market disruption by design” is your best strategy.
- Incumbents routinely dismiss disruptive upstarts as not good enough, until they are
- Signs of future coming market disruption are present and obvious for years.
- Alternative value chains are crucial for disruption
- The customers who will not buy your product, understand why they do not!
Disruptive innovation creates abundance out of scarcity and is one of the most powerful engines of growth for your business. If you would like to review how to make your business model disruptive, contact TechCXO.
Ken Goins is a Finance & Operations partner in TechCXO’s Atlanta office. Ken uses his c-suite leadership skills to develop and execute strategies to maximize revenue growth and operational efficiencies through innovation and process improvements in domestic and international business settings. See his full bio here.