Definition of disruptive innovation
A term linked to entrepreneurship.
In pitching an idea, entrepreneurs often describe their products and services as disruptive.
This term comes from Clayton Christensen’s writing on the challenges big companies face in developing new ideas. Christensen’s argument is that large incumbent companies are focused on delivering value to their existing customers and thus do not always pursue innovations that could potentially attract new customers.
This gap presents an opportunity for entrepreneurs to develop products and services that meet this unsatisfied demand and upend the competitive structure of the entire industry.
Disruptive innovation can come in the form of:
- novel organisational practices like Nucor’s pay-for-performance schemes
- new business models like Southwest’s low-cost approach to flying
- cutting edge technologies like Intuitive’s Da Vinci surgical robot.
For entrepreneurs, market research that gauges the interest of 'latent' customers, who are not yet participating in a market, can be especially valuable in developing disruptive innovation. Disruptive products need not be high tech; Nintendo’s Wii was a low-tech game console with intuitive controls and great gameplay that drew in younger gamers and brought back older aficionados who grew up with Super Mario.