Monthly Archives: December 2015

Disruptive innovation has lost the plot

Clayton Christensen et al have written in the HBR about what disruptive innovation is and isn’t.  I have no real right to disagree as these guys invented the term however I think their definition is too limited.  If you use the ideas in the article to defend against  an innovative competitor you may be acting like the man searching for his keys under the lamp post because that is where the light is.

The article discusses two case studies, Netflix and Uber I am going to introduce a third to illustrate my thinking.

  1. (mine) A hypothetical mobile phone app marketed initially in Africa, developed to the point of offering major competitive advantage and then launched in the different established markets of large companies at lower cost with higher value then their existing products.
  2. Netflix.  Innovative content delivery sold first to the incumbents low value customers.  Eventually developed to the point where it is adopted by high value customers.
  3. Uber.  An explosive coming together of social media and mobile technology to attack the entire taxi market almost overnight.

According to the HBR article only Netflix is disruptive technology because it was matured inside the existing market of the incumbent.

My view is that if you are facing a challenger with a new technology then the key thing you need to address is how that impacts your competiveness in your market and whether it turns your strengths into weaknesses.  If the technology was introduced initially to your low value customers then that is of secondary importance although it gives you some warning of what is happening.

The article states that Uber is sustaining technology like adding a razor blade manufacturer adding a 5th blade to razor!  That I think is clearly wrong.  Nor is the first hypothetical example I provided above a sustaining innovation.  It was this statement that resulted in the rather harsh “Disruptive innovation has lost the plot” being the title of the blog post.

Maybe someone needs to come up with another term  that focuses on the “innovation” and “market disruption” rather than the initial marketing plan of the new entrant.  Then a theory and a set of strategies can be developed around using and defending against this phenomenon.  Perhaps I could suggest “catastrophic innovation”.  That might capture some of the angst that is following Uber around the world.