Disruptive Innovation (Disruptive Technology)

Disruptive innovation is a term used to describe a product or service that starts out small or simple and moves quickly through the lower tiers of a market segment, often displacing established businesses and technologies in lower margin sectors.

Generally, a disruptive innovation focuses on lower profit markets and customers, allowing a new startup or emerging business to be profitable by targeting customers who are underserved in the existing market. In time, the new product or service moves upwards in the market and can eliminate established companies who are slow to react or respond to the innovations.

Examples and Origins of the Phrase

Netflix is an example of a successful disruptive innovator business. When Netflix started, there was no direct competition in the established market (i.e. Blockbuster) but the innovative on-demand streaming model disrupted Blockbuster by focusing on a segment of underserved customers to gain industry presence.

Another classic example of disruptive innovation is the PC market. Personal computers were an innovation that improved over time and eliminated the mainframe industry. Blockchain is another example of a disruptive technology in financial markets.

The phrase disruptive innovation was coined by Harvard Business School professor, Clayton M. Christensen in his research on the disk-drive industry and later popularized by his book The Innovator s Dilemma, published in 1997.

Today, the phrase disruptive technology is a preferred synonym of disruptive innovation.

Vangie Beal
Vangie Beal
Vangie Beal is a freelance business and technology writer covering Internet technologies and online business since the late '90s.

Top Articles

Huge List Of Texting and Online Chat Abbreviations

From A3 to ZZZ we list 1,559 text message and online chat abbreviations to help you translate and understand today's texting lingo. Includes Top...

How To Create A Desktop Shortcut To A Website

This Webopedia guide will show you how to create a desktop shortcut to a website using Firefox, Chrome or Internet Explorer (IE). Creating a desktop...

The History Of Windows Operating Systems

Microsoft Windows is a family of operating systems. We look at the history of Microsoft's Windows operating systems (Windows OS) from 1985 to present...

Hotmail [Outlook] Email Accounts

  By Vangie Beal Hotmail is one of the first public webmail services that can be accessed from any web browser. Prior to Hotmail and its...

Common Business-Oriented Language (COBOL)...

What is COBOL? COBOL stands for Common Business-Oriented Language. It is a 60-year-old programming...

Shared Hosting Definition &...

Shared hosting is a web hosting model in which multiple sites occupy the...

Database Integration Definition &...

Database integration consolidates data from multiple sources to provide businesses with more comprehensive...