Disruptive innovation, a term introduced by Clayton Christensen in 1995 , “describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.”
It is defined in the Harvard Business Review as: “a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses. Specifically, as incumbents focus on improving their products and services for their most demanding (and usually most profitable) customers, they exceed the needs of some segments and ignore the needs of others.
Entrants that prove disruptive begin by successfully targeting those overlooked segments, gaining a foothold by delivering more-suitable functionality—frequently at a lower price. Incumbents, chasing higher profitability in more-demanding segments, tend not to respond vigorously.
Entrants then move upmarket, delivering the performance that incumbents’ mainstream customers require, while preserving the advantages that drove their early success. When mainstream customers start adopting the entrants’ offerings in volume, disruption has occurred.”
- ^ Bower, Joseph L., and Clayton M. Christensen. Disruptive Technologies: Catching the Wave, Harvard Business Review. (Jan-Feb 1995)
- ^ Christensen, Clayton. Disruptive Innovation.
- ^ Christensen, Clayton M.; Raynor, Michael E., and Rory McDonald; What is Disruptive Innovation?, Harvard Business Review. (2015)