With today’s world of constant change and development, business and economic success is heavily dependent on the ability to innovate. Of all the types of innovation, disruptive innovation is unique in the extent to which change occurs at the very basis system levels. It originated by the academic Clayton Christensen, in the 90s, who defined it in the best-seller book ‘The Innovator’s Dilemma’, as a special kind of innovation able to disrupt existing markets and companies. It begins with satisfying a market that is either unmet or poorly served by existing firms but then expands the conflict and threatens to overthrow incumbents.
This article aims to explain what disruptive innovation is and what features that come with it and also demonstrate how this innovation has affected industries and societies in general in as much as it has provided chances as it has brought problems.
Defining Disruptive Innovation
Disruptive innovation implies a situation whereby new companies with small capital overthrow traditional organizations as they introduce product or service in the market that initially focuses on a limited market niche. This new product is normally a less complex, less expensive and is assumed to be of lower standard compared to the industry or dominant products. But as the concept starts spreading more and more, the step by step innovation starts enhancing the quality and usability of the innovation to the extent that it finally suits the masses. Sometimes, the disruptive innovation has the capability to overcome or even replace the market incumbents.
Christensen also observed that incumbent firms tend to rely on “sustaining innovation” which is defined as improvement on current organizational offerings. Sustaining innovation means that businesses can keep offering their products and services in the market, although innovation failure can lead to loss in the position in the marketplace, thus ignoring opportunities for new markets or segments that may not be well served may create room for disruption. This is usually explained by the so called ‘innovator’s paradox,’ whereby the companies that should lead the implementation of technologies capable of disrupting their market opt against it because these technologies enhance current product portfolios.
Some of the critical attributes of disruptive innovation are as follows;
Disruptive innovations have several defining characteristics that differentiate them from other forms of innovation: Disruptive innovations have several defining characteristics that differentiate them from other forms of innovation:
Serving Underserved Markets: Entrepreneurs who introduce disruptive innovations initially target an industry niche that large and entrenched companies neglect. All these innovations seek to cater for the population who is unable to afford what is in the market or simply unable to get access to it.
Simpler and More Affordable Solutions: Disruptive innovations in the first place are firstly cheaper, simpler and often viewed by customers as less effective. However, they are cheaper and very easy to use and therefore, they will attract price-sensitive or non-conventional clientele.
Gradual Improvement: Disruptive technologies on the other hand whose performances enhance over time and in most cases on a rapid note. Gradually the technology or product becomes capable of meeting the requirements of superior clients and may pose a threat to the original products in the market.
Industry Transformation: Disruptive innovations do not only define new categories and offer new products in the market, but instead, they bring transitions in industries and create a shift within the current industries present in a particular market.
Unanticipated by Market Leaders: Which is the case most of the time disruptive innovations are not threats to incumbent companies because they do not target value clusters occupied by their highest value customers. Such is the reason why new entrant companies may not perceive the threat until the technology gains enough traction.
A discussion on how disruptive innovations affects industries.
Innovation disruption in industries has been a decisive factor in the technology dynamic and progressive industries like transport, retailing sector, medical and many others. It has shifted the industry dynamics winning a new way of doing business. Shown below are few of the industries which have been disrupted in various ways.
Technology Industry: These are new business models that have caused a shift in the market by displacing the existing ones; one of them is the PC revolution. During the decade of 1970 and the early eighties, most of the influential players in the computing industry were anchored on creating better tec for commercial use, education, and administrative institutions. These were mainframe computers that were costly, and usually, it needed expertise to handle it.
Nonetheless, leading organizations such as Apple and IBM developed what is known as personal computer which was easy to understand, cheaper and within the reach of an ordinary citizen. At first, PCs had low capability that could not challenge mainframes in business uses but got enhanced in the shortest time. When PC hardware became more advanced and popularity became broader the entire computing market changed and mainframe systems started to decline while the use of personal computers prevailed.
Transportation Industry: The current and arguably the most affected sector by on-demand transportation providers like Uber, Lyft among others. The taxi industry was the major player in providing urban transportation before the entrances of these P2G service providers; this was characterized by several limitations such as; it was highly regulated, offered expensive services, and was scarce. Both Uber and Lyft shattered this market by using smartphone application and GPS to build an effective platform of real-time match between passengers and driver.
This transition became rampantly fast since the initial idea of a niche service was expanded to provide the citizens with more readily available and cheaper means of transport. It took traditional taxi firms a long time to wake up to the reality and many of them have since then been operating under reduced competitiveness. The ride sharing model has not only affected the taxi industry but also the ownership of cars, design of cities and the planning of public transport systems.
Retail Industry: Almost all sectors have become affected with the emergence of e-commerce platforms such as Amazon to the retail business. The traditional channel retailing was mainly formed by brick and mortar store retailers where consumers went to the actual store for their purchases. Amazon upset this model by providing a marketplace by which the consumer could go online and buy these products from the comfort of their homes, most at cheaper rates than physical shopping centers and the products would be delivered direct to their door steps.
In the past people used to believe that online shopping was not reliable and not as convenient as shopping inside the store. However, over the years as the firm enhanced its logistics delivery times, and even improved the assortment of products it offered it turned into the one-stop shopping mall for millions of consumers. Traditional real life retailers have been threatened by this new form of selling and a shift has been made to holding an online retail store.
Healthcare Industry: Telemedicine and other digital health solutions are challenging the conventional, clinic-based or personal-appointment-based medical model of health care delivery. Telemedicine enables a patient to seek medical advice from a doctor or any other health care provider through the use of the video conferencing, installing messaging apps or online platforms. This innovation is equally important for the patients in the rural regions or defined as the patients in the regions where the supply of health care facilities is rather limited.
Telemedicine was initially a limited service, but it has grown significantly fast; it was even more prominent during the pandemic where physical appointments were prohibited. It has brought changes in the conventional healthcare delivery system since it has made the services to be produced and accessed easily by the patients. It can be expected that as the technology advances, a larger importance in the future of healthcare will be taken by the technology.
Disruptive Innovation: Connecting with Societal Transformation
Since disruption is a powerful force it has always had an influence on the society and its social structures. It changes the ways individuals, societies and businesses exist, perform and possibly communicate. Below are several ways in which disruptive innovation influences societal change:Below are several ways in which disruptive innovation influences societal change:
Job Creation and Job Loss: Disruptive innovation is a process in which new forms of employment are continuously being developed at the same time as existing employment positions are lost. For instance, with the emergence of e-commerce facilities, employment opportunities have emerged in shipping, storage, and internet advertising but have ended traditional retail shops’ employment opportunities. Similarly, the so-called ‘gig economy’ associated with such companies as Uber, Lyft or TaskRabbit has opened new possibilities for freelance and project-based work, which challenges the more conventional approaches to employment.
Changing Consumer Behavior: Disruptive innovation alters the way through which people use products and/or services. Current technology such as Netflix has altered how people consume their content as they ditch cable and disc and transition towards streaming. In the same way, the development of smartphone has affected how people perform their communication, shopping, and access to information in their day to day activities.
Social Equity: Disruptive innovations can resolve social problems mainly because they lower the cost and make products and services available. For instance, microfinance drawn from conventional banking industry has seek to empower individuals and groups to engage in business ventures through provision of loans even when they cannot afford large amounts.
Education and Access to Knowledge: Technological advancement disrupting the education industry that has given birth to the online learning platforms like Coursera, Khan academy, edX and many more has given education to the people in the world. These platforms offer courses from the best universities and institutions and are usually free or offered at very low charges ensuring that persons across all over the world can be trained.
Challenges of Disruptive Innovation
Thus, disruptive innovation, as a well-known source of immense opportunities, also has its tricky aspects. The big fishes are always in a better position to defend their business models that limits the ways they can possibly respond to disruptive threats. This can culminate in the decline of even the most effective companies in the market whenever they do not change their strategies to suit emerging conditions in the market.
Moreover, disruption that has become very rampant today displaces individuals from their useful jobs as industries popular before are substituted by new technologies. Employees in declining sectors might struggle to find new suitable employment and could also lack the skills that will enable them to work in the new created positions.
Furthermore, the advancement of technology has been at a very fast pace and hence the impact of this advancement is to increase the dimension of inequality especially when the new technology is unequally distributed among the population. For example, efficient internet connection is essential for engaging in online learning, but many rural or other poorly provided areas cannot boast of it.
Conclusion
Disruptive innovation is one of the most important trends that may bring change to various industries and thus impact society. Starting from the personal computers to ride-sharing, to online retail, disruptive innovations have transformed the ways of business operations and consumption of products and services. Although a disruptive innovational opens the doors of great opportunities and innovations, it also comes with challenges especially for the corporations and employees of disrupted organizations.
Whenever more disruptive innovations continue to rise, there will be need for the business, government and the whole society to prepare to embrace change. To make the best out of disruption one needs to cultivate the right approach within the company and remain efficient in responding to it. As the history proves that those people who welcome the change always become leaders in the forthcoming world.
