Innovation plays a critical role in contributing to change since it acts as a source of change in industries hence impacting the society. Out of all the types of Innovations disruptive Innovation is the most influential force that can radically overthrow industries business models as well as societies. The concept of disruptive innovation was put forward by Clayton M. Christensen of the Harvard Business School in the 1990s, disruptive innovation is basically the process whereby a company or an organization with fewer resources effectively weans out or displaces the existing industry giants by first targeting a niche market into which the giants are unwilling to venture. On an extended period, it reaches the state where it took or alters the whole market of the industry.
Disruptive technology advancement can be seen around most industries such as the technological industry, healthcare, transportation and even the retail among others. In this article, you will learn the definition of disruptive innovation, in what ways it is different from sustaining innovation, and the case of how it has impacted industries and societies.
What is Disruptive Innovation?
Disruptive innovation on the other hand is a process in which an idea, product or service that alters the dynamics behind the typical business practices as well as the relationship between the consumers and the industries that it represents. The most important feature of disruption is the fact that disruptive innovations can start with low-end customers or non-customers in most cases, which are the most ignored or served poorly by the entrenched giants. First, the disruptive product is not as effective as the mainstream product, though as the latter evolves, it captures a market niche and subsequently dislodges the mainstream product.
On the other hand sustaining innovation requires adding on or modifying the existing solutions to meet the need of the existing customers. Thus, sustaining innovation enables companies to retain their competitive advantage; however, more often than not, sustaining innovation is incremental and does not possess the potential of disruptive innovation.
Main Features of Disruptive Innovation
Targeting an underserved market: It’s common for disruptive innovations to originate with solutions that directly cater to an unmet customer base in a market. Such segments may include those customers who are more price-sensitive, or who require less complicated and/or easily accessible solutions.
Initially lower performance: The disruptive products or services may also be considered as lower-performing as compared to the incumbents or the mainstream products in their initial stages, this explains why they are not noticed by the incumbents or the main players in the market. However, as the host technology or service equates the functional benefit to the mainstream customers’ expectations, it starts to exceed them.
Cost-effectiveness: Disruptive innovations do this by giving a simpler and cheaper version of the product or service offered hence it is more accessible. This can lead to shift in the market since the labeled product is replaced by the cheaper version which can easily be used.
Gradual transformation: First of all, disruptive innovation does not have a revolutionary impact on the markets; it changes gradually, and then all of a sudden, it surpasses the traditional market players. This slow process enables it to operate ‘under the radar’ of industry titans and before they can counteract it is already too late.
In this paper I discuss the topic of disruption and its effect on industries.
Disruptive innovation has heavily impacted many parts of our Lives including technology, transport, entertainment, and even healthcare. These innovations have disrupted the business that was conventional, transformed ages-long-established firms, and shifted customer’s expectations. Here are few examples of disruptive industries:
The Technology Industry: Recall that one of the most typical examples of disruptive innovation can be observed in the sphere of personal computing. For most of the 1970s and early 1980 or so the major computing players were all immersed in producing ever more powerful, and expensive, machines targeted at large business customers. Major players such as DEC were controlling the market with their high end selling mainframe computers which were expensive.
However, Apple and IBM came up with PCs that where not as powerful as main frames but where cheap to the average consumers and small scale businesses. First of all, the personal computer did not operate effectively sometimes it could not even compare to the efficiency of mainframes. But the PCs were at first underpowered and could only carry out tasks that were previously done by cheaper computers, however as time went on with improvements in technology PCs evolved to become more powerful than other computers that used to give more profitable results, companies such as DEC were rendered useless.
The Transportation Industry: Ride-sharing companies such as Uber, Lyft and others are yet another cases of disruptive innovation. Conventional taxi services have been traditional(request) players in the transport market that delivered standardized services across almost all cities globally. They said that the system was however characterized by inefficiencies such as reduced availability, high price and unsatisfactory customer relations.
Successfully, ride-sharing companies utilized smartphone app and GPS to establish an innovative platform of people-hailing transportation service given by anyone with an available car. Uber and Lyft begun by providing service cheaper than that of taxis mainly to the budget wise consumers. In the long run, application that enable passengers to share rides in cars that are driven by other passengers via contract became famous and thus posed a threat to conventional taxi services that provided convenience, cost transparency and flexibility for both the drivers and the passengers. That resulted in the major overhaul of the entire transportation sector while modern ride-sharing services became one of the key players in the urban mobility sphere.
The Entertainment Industry: Today, entertainment industry has also undergone disruption which is most evident with the new arrivals of streaming service companies like Netflix. Before streaming, the company which dominated the market offered movies and shows through either renting DVD’s like Blockbuster or subscribing to cable television. Netflix initially started as a DVD rental by mail service; this initially catered only to the market of DVD renters who wanted a more convenient way than local video shops.
Subsequently, with the availability of bandwidth in the internet, Netflix went for streaming services. This change in the business model impacted all levels of the entertainment industry due to disruption that claimed many physical rental stores including Blockbuster and change the traditional media consumption model into more perused digital streaming. At present, streaming services have cropped up as the most common source of media content consumption shifting the face of the entertainment industry.
The Healthcare Industry: It is trending in the healthcare industry since there is disruption of traditional methods by new ones such as tele-medicine and digital health platforms. Conventionally, healthcare services are face-to-face, where the patient has to attend a clinic or hospital or some other place to meet the doctor. Traditional telemedicine has recently affected this model through enabling the patients to consult the doctors through video conference from the comfort of their homes.
This has brought enhanced access to health care especially for those in the rural areas or in part of the country with limited number of doctors. It has also decreased the number of hours, or days that one has to spend in order to access medical care. Since the utilization of telemedicine technology is on the right track with the enhancement of its innovations and reception it is expected to play the role of a basic component of the delivery system of healthcare.
Disruptive Innovation and Social Change
In addition to industries, disruptive innovation can change societies by changing consumption patterns, employment resumes, and the norms of acceptable behavior. What happens is that with the disruption of industries new types of business models start coming up and this changes the type of employment in an economy while dissipating others. It can result in much social transformation since people and societies adapt to the new economic situations.
An example of societal impact that can be traced from this is the gig economy. Uber, Airbnb, and TaskRabbit are some of examples of how startups affected employment structures by providing freelance services to the clients. This progression has resulted in the gig economy so that instead of working as employees, most people become contractors or freelancers. While this providesvious and chances for many, it has also cut concerns regarding job security, benefits, and workers’ rights in new economy.
Challenges of Disruptive Innovation
As we have seen, there are great benefits associated with disruptive innovation; but like any innovation, it is not without its problems. Traditional incumbents have even more problems when faced with disruptive competitors because their organizational culture is to create better things with existing models and offer better services rather than inventing new economies and new forms of consumption. The failure to capitalize on this in a timely manner creates the ‘innovator’s dilemma’ which may bring the best of firms to their knees.
However, disruptive innovation can actually create problems especially when it comes to employment since it leads to emergence of new jobs at the same time displacing others. Technologies such as automation for example have affected many industries like the manufacturing sector and thereby displacing workers from their traditional trades. With the development of new technologies it is essential to retrain and train the workforce to meet these new developments.
Conclusion
Disruptive innovation is one of the most significant processes that influenced the existing industries, the appearance of new models, and the development of societies. It starts in these sectors as a small technology but could grow to revolutionalise the entire industry little by little. From personal computers, and social media to ride sharing and streaming no industry is immune to the disruptive effects that technologically disruptive innovations are bringing about. Although these innovations have their drawbacks such as the subversion of conventional forms of business and employment they are laden with potential for development and progress in every society.
In the exponentially more connected and digital world that is yet to come, the disruptive innovation’s role shall remain an essential aspect of shaping the future, and bringing changes across the various industries and into the ways societies evolve and provide for their needs.
