Assignment 2 Research
What is disruptive innovation
They start by clarifying what classic disruption entails—a small enterprise targeting
overlooked customers with a novel but modest offering and gradually moving upmarket to
challenge the industry leaders. They point out that Uber, commonly hailed as a disrupter,
doesn’t actually fit the mold, and they explain that if managers don’t understand the nuances
of disruption theory or apply its tenets correctly, they may not make the right strategic
choices. Common mistakes, the authors say, include failing to view disruption as a gradual
process (which may lead incumbents to ignore significant threats) and blindly accepting the
“Disrupt or be disrupted” mantra (which may lead incumbents to jeopardize their core
business as they try to defend against disruptive competitors).
The authors acknowledge that disruption theory has certain limitations. But they are
confident that as research continues, the theory’s explanatory and predictive powers will only
The theory goes that a smaller company with fewer
resources can unseat an established, successful
business by targeting segments of the market that have
been neglected by the incumbent, typically because it is
focusing on more profitable areas.
As the larger business concentrates on improving
products and services for its most demanding
customers, the small company is gaining a foothold at
the bottom end of the market, or tapping a new market
the incumbent had failed to notice.
This type of start-up usually enters the market with new
or innovative technologies that it uses to deliver
products or services better suited to the incumbent’s
overlooked customers – at a lower price. Then it moves
steadily upmarket until it is delivering the performance
that the established business’s mainstream customers
expect, while keeping intact the advantages that drove
its early success.
Disruption happens when the incumbent’s mainstream
customers start taking up the start-up’s products or
services in volume. Think Blockbuster and Netflix.