Disruptive Innovation

A theory of a particular competitive process in which an entrant begins with overlooked, overserved, or previously unserved users and may improve toward more demanding markets. Its different cost structure and priorities can make the initial foothold unattractive to established providers. Being new, inexpensive, or successful does not by itself make an innovation disruptive.

The theory focuses on a particular competitive process, not every surprising invention. An entrant may initially serve people who are overlooked, overserved, or unable to use an established offering. The entrant’s different cost structure and priorities can make that foothold attractive even when established providers see little reason to pursue it. Movement toward more demanding customers is part of the proposed trajectory, not an automatic consequence of being inexpensive.

To apply the lens, specify the incumbent, the initial users, the performance tradeoff, and the route by which the entrant could improve. Ask what would make the incumbent’s response difficult and whether the entrant can operate sustainably. A compelling story assembled after a company succeeds is weaker evidence than an explicit account that also considers failed entrants and alternative explanations.

When to use it

When examining a possible low-end or new-market entrant, an incumbent’s response incentives, or the distinction between sustaining improvements and a proposed disruptive trajectory.

How it can help

Supports investigation of neglected users, different business models, and competitive trajectories. It can help an incumbent examine an apparently unattractive entrant and help a new provider articulate a possible foothold.