A disruptive technology or disruptive innovation is a technological innovation, product, or service that eventually overturns the existing dominant technology or product in the market. Disruptive innovations can be broadly classified into lower-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption, whereas a lower-end disruptive innovation is aimed at mainstream customers who were ignored by established companies. Sometimes, a disruptive technology comes to dominate an existing market by either filling a role in a new market that the older technology could not fill (as more expensive, lower capacity but smaller-sized hard disks did for newly developed notebook computers in the 1980s) or by successively moving up-market through performance improvements until finally displacing the market incumbents (as digital photography has begun to replace film photography). Typical hard drives of the mid-1990s. ... The Canon EOS 350D The Canon PowerShot A95 Digital photography, as opposed to film photography, uses electronic devices to record the image as binary data. ...

By contrast, "sustaining technology or innovation" refers to the successive incremental improvements to performance that market incumbents incorporate into their existing product.

The term disruptive technology was coined by Clayton M. Christensen and described in his 1997 book The Innovator's Dilemma. In his sequel, The Innovator's Solution, Christensen replaced the term with the term disruptive innovation because he recognized that few technologies are intrinsically disruptive or sustaining in character. It is strategy that creates the disruptive impact. Clayton M. Christensen (born April 6, 1952 in Salt Lake City, Utah) is the Robert and Jane Cizik Professor of Business Administration at the Harvard Business School, with a joint appointment in the Technology & Operations Management and General Management faculty groups. ... 1997 (MCMXCVII) was a common year starting on Wednesday of the Gregorian calendar. ...

This term has now reached the point of excessive usage in industry. It is preferred by those who market and sell new products, but rarely used by those who actually invent them, who generally find it undignified and arrogant to claim that their new idea will revolutionize the world.

The theory

Christensen distinguishes between "low-end disruption" which targets customers who do not need the full performance valued by customers at the high end of the market and "new-market disruption" which targets customers who could previously not be served profitably by the incumbent.

"Low-end disruption" occurs when the rate at which products improve exceeds the rate at which customers can adopt the new performance. Therefore, at some point the performance of the product overshoots the needs of certain customer segments. At this point, a disruptive technology may enter the market and provide a product which has lower performance than the incumbent but which exceeds the requirements of certain segments, thereby gaining a foothold in the market.

How low-end disruption occurs over time.

In low-end disruption, the disruptor is focused initially on serving the least profitable customer, who is happy with good enough product. This type of customer is not willing to pay premium for enhancements in product functionality. Once the disruptor has gained foot hold in this customer segment, it seeks to improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate. The incumbent will not do much to retain its share in not so profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then finally the disruptive technology meets the demands of the most profitable segment and drives the established company out of the market. Download high resolution version (802x450, 7 KB)Disruptive Technology Graph File links The following pages link to this file: Disruptive technology ... Download high resolution version (802x450, 7 KB)Disruptive Technology Graph File links The following pages link to this file: Disruptive technology ...

"New market disruption" occurs when a product that is inferior by most measures of performance fits a new or emerging market segment. The Linux operating system (OS) when introduced was inferior in peformance to other server operating systems like Unix and Windows NT. But the Linux OS distributed through Red Hat is supposed to be inexpensive compared to other server operating systems. After years of improvements in this easily available operating system, the functionality has improved so much that it threatens to displace all the other leading server operating systems. Linux (also known as GNU/Linux) is a Unix-like computer operating system. ... To meet Wikipedias quality standards, this article or section may require cleanup. ... Unix or UNIX is a computer operating system originally developed in the 1960s and 1970s by a group of AT&T Bell Labs employees including Ken Thompson, Dennis Ritchie, and Douglas McIlroy. ... Windows NT is a family of operating systems produced by Microsoft, the first version of which was released in July 1993. ... Red Hat, Inc. ...

Not all disruptive technologies are of lower performance. There are several examples where the disruptive technology outperforms the existing technology but is not adopted by existing majors in the market. This situation occurs in industries with a high investment into the older technology. To move to the new technology, an existing player not only must invest in it but also must replace (and perhaps dispose of at high cost) the older infrastructure. It may simply be the most cost effective for the existing player to "milk" the current investment during its decline - mostly by insufficient maintenance and lack of progressive improvement to maintain the long term utility of the existing facilities. A new player is not faced with such a balancing act.

Some examples of high-performance disruption:

• The rise of containerization and the success of the Port of Oakland, California, while the port of San Francisco neglected modernization - perhaps wisely due to its inconvenient location at the end of a peninsula not oriented with the prevailing freight traffic. Rather than attempt to compete in the oceanic freight terminal business, the city's resources were directed elsewhere, primarily toward becoming the leading financial center on the west coast through the encouragement of the construction of high rise buildings for office space.
• VoIP phone technology is a disruptive innovation. The quality of voice that is available over this phone system is at least as good as that has been offered by traditional players.

The Port of Oakland was the first major port on the Pacific Coast of the United States to build terminals for container ships. ... This page is a candidate for speedy deletion. ...

Examples of disruptive innovations

Not all technologies promoted as disruptive innovations have actually prospered as well as their proponents had hoped. However, some of these technologies have only been around for a few years, and their ultimate fate has not yet been determined. A steam engine is an external combustion heat engine that makes use of the thermal energy that exists in steam, converting it to mechanical work. ... An internal combustion engine is an engine that is powered by the expansion of hot combustion products of fuel directly acting within an engine. ... Binomial name Equus caballus Linnaeus, 1758 The horse (Equus caballus, sometimes seen as a subspecies of the Wild Horse, Equus ferus caballus) is a large odd-toed ungulate mammal, one of ten modern species of the genus Equus. ... This article or section does not cite its references or sources. ... Binomial name Equus caballus Linnaeus, 1758 The horse (Equus caballus, sometimes seen as a subspecies of the Wild Horse, Equus ferus caballus) is a large odd-toed ungulate mammal, one of ten modern species of the genus Equus. ... The Locomotive Act was an act (actually a series of acts) of British parliament to organize road traffic for self-propelled machines in Britain during the second half of the 19th century. ... Hydraulics is a branch of science and engineering concerned with the use of liquids to perform mechanical tasks. ... A tracked excavator by Daewoo. ... A cable is two or more wires or optical fibers bound together, typically in a common protective jacket or sheath. ... In microeconomics and strategic management, the term vertical integration describes a style of ownership and control. ... A steel mill at the turn of the century in Pittsburgh, Pennsylvania A steel mill (British English and Australian English steelworks) is an industrial plant for the manufacture of steel. ... Minicomputer (colloquially, mini) is a largely obsolete term for a class of multi-user computers which make up the middle range of the computing spectrum, in between the largest multi-user systems (traditionally, mainframe computers) and the smallest single-user systems (microcomputers or personal computers). ... Mainframes (often colloquially referred to as big iron) are large and expensive computers used mainly by government institutions and large companies for legacy applications, typically bulk data processing (such as censuses, industry/consumer statistics, ERP, and bank transaction processing). ... Container ship Rita being loaded at Copenhagen; note crew standing on deck, and stacks of containers on shore. ... Containerization is a system of intermodal cargo transport using standard ISO containers (also known as isotainers) that can be loaded sealed and intact onto container ships, railroad cars and trucks. ... A cargo ship or freighter is any sort of ship or vessel that carries goods and materials from one port to another. ... A stevedore is a person who works at loading or unloading a ship. ... Desktop publishing (also known as DTP) combines a personal computer, page layout software and a printer to create publications on a small economic scale. ... This article is concerned with the production of books, magazines, and other literary material (whether in printed or electronic formats). ... ... The Canon EOS 350D The Canon PowerShot A95 Digital photography, as opposed to film photography, uses electronic devices to record the image as binary data. ... When a photographer presses the button, there is a delay before a photograph is actually recorded. ... Minicomputer (colloquially, mini) is a largely obsolete term for a class of multi-user computers which make up the middle range of the computing spectrum, in between the largest multi-user systems (traditionally, mainframe computers) and the smallest single-user systems (microcomputers or personal computers). ... A computer workstation, often colloquially referred to as workstation, is a high-end general-purpose microcomputer designed to be used by one person at a time and which offers higher performance than normally found in a personal computer, especially with respect to graphics, processing power and the ability to carry... The Compact Disc logo was inspired by that of the previous Compact Cassette. ... Typical 60-minute Compact Cassette. ... Manufacturers put records inside protective and decorative cardboard jackets and an inner paper sleeve to protect the grooves from dust and scratches. ... A semiconductor is a material with an electrical conductivity that is intermediate between that of an insulator and a conductor. ... In electronics, a vacuum tube (U.S. and Canadian English) or (thermionic) valve (outside North America) is a device generally used to amplify, or otherwise modify, a signal by controlling the movement of electrons in an evacuated space. ... In electronics and digital circuits, the flip-flop or bistable multivibrator is a pulsed digital circuit capable of serving as a one-bit memory. ... Close-up photo of one side of a motherboard PCB, showing conductive traces, vias and solder points for through-hole components on the opposite side. ... Integrated circuit showing memory blocks, logic and input/output pads around the periphery A monolithic integrated circuit (also known as IC, microchip, silicon chip, computer chip or chip) is a miniaturized electronic circuit (consisting mainly of semiconductor devices, as well as passive components) which has been manufactured in the surface... Close-up photo of one side of a motherboard PCB, showing conductive traces, vias and solder points for through-hole components on the opposite side. ... Sequence of a race horse galloping. ... Static CMOS Inverter Complementary-symmetry/metal-oxide semiconductor (CMOS) (see-moss, IPA:), is a major class of integrated circuits. ... The word video sensor (also video-sensor or videosensors) describes a technique of digital image analysis. ... Undeveloped Arista black and white film, ISO 125. ... Muskets and bayonets aboard the frigate Grand Turk. ... A crossbow is a weapon consisting of a bow mounted on a stock that fires projectiles. ... A longbow is a type of bow that is tall (roughly equal to or greater than the height of a person), is not recurved and has relatively narrow limbs, that are circular or D-shaped in cross section. ... Paddle steamers - Lucerne-Switzerland Left: original paddlewheel from a paddle steamer on the lake of Lucerne. ... Traditional wooden cutter beating. ... A telephone handset A touch-tone telephone dial Telephone The telephone or phone (Greek: tele = far away and phone = voice) is a telecommunications device that transmits speech by means of electric signals. ... Optical Telegraf of Claude Chappe on the Litermont near Nalbach, Germany Telegraph and telegram redirect here. ...

Unresolved examples of technologies promoted as 'disruptive innovations'

• Music downloads and File sharing vs. compact discs
• ebooks vs. paper books
• e-commerce vs. Physical shops
• Free / Open-source software vs. proprietary software (for example GNU/Linux versus Microsoft Windows, GNU/Linux has already largely displaced proprietary Unix)
• Internet Video on Demand and IPTV vs. Advertising supported broadcast and cable television
• VoIP (and VoIP over 802.11) vs. traditional telephone and mobile phone service.

A music download is a song or album available for downloading on the Internet. ... File sharing is the activity of making files available to other users for download over the Internet, but also over smaller networks. ... The Compact Disc logo was inspired by that of the previous Compact Cassette. ... An eBook (also: e-book, ebook) is an electronic (or digital) version of a book. ... [1]#redirect Book ... Electronic commerce, EC, e-commerce or ecommerce consists primarily of the distributing, buying, selling, marketing, and servicing of products or services over electronic systems such as the Internet and other computer networks. ... This article is about free software as defined by the sociopolitical free software movement; for information on software distributed without charge, see freeware. ... Open source software refers to computer software available with its source code and under an open source license. ... Proprietary software is software that has restrictions on using and copying it, usually enforced by a proprietor. ... Unix systems filiation. ... Microsoft Windows is a family of operating systems by Microsoft. ... Internet Protocol Television (IPTV) has become a common denominator for systems where television and/or video signals are distributed to subscribers using a broadband connection over Internet Protocol. ... It has been suggested that IP Media be merged into this article or section. ... Coaxial cable is often used to transmit cable television into the house. ... IP Telephony, also called Internet telephony, is the technology that makes it possible to have a telephone conversation over the Internet or a dedicated Internet Protocol (IP) network instead of dedicated voice transmission lines. ... IEEE 802. ... An old rotary telephone This article is about telephone technology. ...

Business implications

Disruptive technologies are not always disruptive to customers, and often take a long time before they are significantly disruptive to established companies. They are often difficult to recognize. Indeed, as Christensen points out and studies have shown, it is often entirely rational for incumbent companies to ignore disruptive innovations, since they compare so badly with existing technologies or products, and the deceptively small market available for a disruptive innovation is often very small compared to the market for the established technology.

Even if a disruptive innovation is recognized, existing businesses are often reluctant to take advantage of it, since it would involve competing with their existing (and more profitable) technological approach. Christensen recommends that existing firms watch for these innovations, invest in small firms that might adopt these innovations, and continue to push technological demands in their core market so that performance stays above what disruptive technologies can achieve.

Disruptive technologies, too, can be subtly disruptive, rather than prominently so. Examples include digital photography (the sharp decline in consumer demand for common 35mm print film has had a deleterious effect on freeriders such as slide and infrared film stocks, which are now more expensive to produce) and IP/Internet telephony, where the replacement technology does not, and sometimes cannot practically replace all of the non-obvious attributes of the older system (sustained operation through municipal power outages, national security priority access, the higher degree of obviousness that the service may be life-safety critical or deserving of higher restoration priority in catastrophes, etc).

See also

• Paradigm shift
• Technology strategy
• Disruptive Technologies Office

Paradigm shift is the term first used by Thomas Kuhn in his 1962 book The Structure of Scientific Revolutions to describe the process and result of a change in basic assumptions within the ruling theory of science. ... Technology (as in Information Technology strategy explains how information technology is being deployed in response to business strategy. ... The Disruptive Technologies Office, or DTO, is a funding agency within the United States Intelligence Community. ...

External links

• "The Disruptive Potential of Game Technologies: Lessons Learned from its Impact on the Military Simulation Industry", by Roger Smith in Research Technology Management (Sept/Oct 2006)
• Disruptive Technology at c2.com
• Disruptive Technology at The Economist: The blood of incumbents
• RSS: Disruptive Technology Hiding in Plain Sight
• The Myth of Disruptive Technologies. Note that Dvorak's definition of disruptive technology does not necessarily match the standard one described above. He complains about the overuse of the term and goes as far as claiming there are no disruptive technologies.
• The Business of Technology - how disruptive technologies are changing the business landscape
• On Disruption Disruption: The best way for companies to create new growth. Management Tools, Articles and Interviews with Thought Leaders on disrupting markets to create growth.

Books and papers

• Christensen, Clayton M. (1997). The Innovator's Dilemma. Harvard Business School Press. ISBN 0-87584-585-1.
• Christensen, Clayton M.;Raynor, Michael E. (2003). The Innovator's Solution. Harvard Business School Press. ISBN 1-57851-852-0.
• Tushman, M.L. & Anderson, P. (1986). Technological Discontinuities and Organizational Environments. Administrative Science Quarterly 31: 439-465.
• Christensen, Clayton M.;Anthony, Scott D.; Roth, Erik A. (2004). Seeing What's Next. Harvard Business School Press. ISBN 1-59139-185-7.
• Christensen, Clayton M; Bohmer, Richard; Kenagy, John. "Will Disruptive Innovations Cure Health Care?" Harvard Business Review, September 2000.
• Mountain, Darryl R., 'Could New Technologies Cause Great Law Firms to Fail?' [1]
• Mountain, Darryl R., 'Disrupting conventional law firm business models using document assembly', International Journal of Law and Information Technology 2006; doi: 10.1093/ijlit/eal019 [2]

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