Business strategy: Disruptive Innovation

Strategy: Disruptive innovation
Key person: Clayton Christensen
This business strategy mainly focuses upon describing the impact of new technologies on a firm's existence. Clayton Christensen first coined the phrase "disruptive technologies" in 1997, in his book "The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail". A disruptive innovation is a successfully exploited product, service, or business model that significantly transforms the demands and needs of a mainstream market and disrupts its former key players,' says an article in Malaysia's Business Times (April 10). Digital and photocopying technologies are examples of disruptive innovations.

There are two types of Disruptive Innovations.
1. Creates a new market by targeting non-consumers.
2. Competing in the low end of an established market.

Even though Technology is still a key source of disruptive innovation, other important elements are concept of consumer value and business models which includes vertical integration, business processes

An example for the technology driven disruption is GM’s OnStar vehicle sensing and tracking system that uses a combined GPS / GSM technology bundle to pin-point vehicle location for roadside assistance. Aravind Eye Hospitals which pioneered the low cost cataract operations is a good business model disruption.
Some disadvantages of the disruptive innovations are, since the market is new and the company is addressing to the low end customers, achieving big profits may take long time. Understanding the needs of the customers, designing the innovative products and informing them about the brand may not be an easier task and it will also take huge investments.

Source: 12 manage