Disruptive innovation

In business theory, disruptive innovation is innovation that creates a new market and value network or enters at the bottom of an existing market and eventually displaces established market-leading firms, products, and alliances.^[1] The term, "disruptive innovation" was popularized by the American academic Clayton Christensen and his collaborators beginning in 1995,^[2] but the concept had been previously described in Richard N. Foster's book "Innovation: The Attacker's Advantage" and in the paper Strategic Responses to Technological Threats.^[3]

Not all innovations are disruptive, even if they are revolutionary. For example, the first automobiles in the late 19th century were not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles. The market for transportation essentially remained intact until the debut of the lower-priced Ford Model T in 1908.^[4] The mass-produced automobile was a disruptive innovation, because it changed the transportation market, whereas the first thirty years of automobiles did not.

Disruptive innovations tend to be produced by outsiders and entrepreneurs in startups, rather than existing market-leading companies. The business environment of market leaders does not allow them to pursue disruptive innovations when they first arise, because they are not profitable enough at first and because their development can take scarce resources away from sustaining innovations (which are needed to compete against current competition).^[5] Small teams are more likely to create disruptive innovations than large teams.^[6] A disruptive process can take longer to develop than by the conventional approach and the risk associated to it is higher than the other more incremental, architectural or evolutionary forms of innovations, but once it is deployed in the market, it achieves a much faster penetration and higher degree of impact on the established markets.^[7]

Beyond business and economics disruptive innovations can also be considered to disrupt complex systems, including economic and business-related aspects.^[8] Through identifying and analyzing systems for possible points of intervention, one can then design changes focused on disruptive interventions.^[9]