Disruptive and Sustaining Innovation Develop evolutions while seeking revolutions. Contact us Submit RFP. Did you find this useful? Yes No. A great example of disruptive innovation is Apple in the early s. Apple combined excellent and ground-breaking new technology in the form of the iPod, with innovation in the form of iTunes massively simplifying the ability to download digital music.
This changed the way people interacted with digital and portable music and, obviously, helped make Apple one of the great tech companies of the 21st century. Sustaining technology and innovation is about development and improvement, working within established markets and with pre-existing products and ideas, but enhancing, improving performance and making things better. Sustaining technology is essentially companies improving their products, and competing with other organizations providing similar services, in a race about who has the best tech.
Some sustaining innovation can be slow, year-on-year improvement, whilst some can be huge, giant leaps forward. Sustaining innovation all takes place within pre-existing markets that customers, consumers and users have demonstrated they value already. A great example of sustaining innovation is the current smartphone market. Every year big companies bring out new, improved products, and identify extra features, new ways of doing things and incremental or huge improvements in performance that give their product the edge.
So sustaining technology largely comes about as a result of listening to the needs of your current audience, whereas disruptive technology is all about shooting for a new audience, or persuading existing users that they want something different. Email required. Please note: comment moderation is enabled and may delay your comment.
There is no need to resubmit your comment. Notify me of followup comments via e-mail. Written by : Sagar Khillar. Jay and Bora Ozkan. Print [1]Lasrado, Flevy. Indiana, United States: Trafford Publishing, User assumes all risk of use, damage, or injury. You agree that we have no liability for any damages. Author Recent Posts. Sagar Khillar. He has that urge to research on versatile topics and develop high-quality content to make it the best read. Thanks to his passion for writing, he has over 7 years of professional experience in writing and editing services across a wide variety of print and electronic platforms.
Either they will beat back the entrant by offering even better services or products at comparable prices, or one of them will acquire the entrant. When new technology arises, disruption theory can guide strategic choices. According to disruption theory, Uber is an outlier, and we do not have a universal way to account for such atypical outcomes.
Market entry and prices are closely controlled in many jurisdictions. Consequently, taxi companies have rarely innovated. Individual drivers have few ways to innovate, except to defect to Uber. So Uber is in a unique situation relative to taxis: It can offer better quality and the competition will find it hard to respond, at least in the short term.
This lower price imposes some compromises, as UberSELECT currently does not include one defining feature of the leading incumbents in this market: acceptance of advance reservations.
Consequently, this offering from Uber appeals to the low end of the limousine service market: customers willing to sacrifice a measure of convenience for monetary savings.
Initially, the theory of disruptive innovation was simply a statement about correlation. Empirical findings showed that incumbents outperformed entrants in a sustaining innovation context but underperformed in a disruptive innovation context. The reason for this correlation was not immediately evident, but one by one, the elements of the theory fell into place.
In other words, incumbents sensibly listen to their existing customers and concentrate on sustaining innovations as a result. For example, interviews with managers of established companies in the disk drive industry revealed that resource allocation processes prioritized sustaining innovations which had high margins and targeted large markets with well-known customers while inadvertently starving disruptive innovations meant for smaller markets with poorly defined customers.
Those two insights helped explain why incumbents rarely responded effectively if at all to disruptive innovations, but not why entrants eventually moved upmarket to challenge incumbents, over and over again. It turns out, however, that the same forces leading incumbents to ignore early-stage disruptions also compel disrupters ultimately to disrupt. The incumbents provide a de facto price umbrella, allowing many of the entrants to enjoy profitable growth within the foothold market.
But that lasts only for a time: As incumbents rationally, but mistakenly cede the foothold market, they effectively remove the price umbrella, and price-based competition among the entrants reigns.
Some entrants will founder, but the smart ones—the true disrupters—will improve their products and drive upmarket, where, once again, they can compete at the margin against higher-cost established competitors.
The disruptive effect drives every competitor—incumbent and entrant—upmarket. With those explanations in hand, the theory of disruptive innovation went beyond simple correlation to a theory of causation as well. The key elements of that theory have been tested and validated through studies of many industries, including retail, computers, printing, motorcycles, cars, semiconductors, cardiovascular surgery, management education, financial services, management consulting, cameras, communications, and computer-aided design software.
Additional refinements to the theory have been made to address certain anomalies, or unexpected scenarios, that the theory could not explain. For example, we originally assumed that any disruptive innovation took root in the lowest tiers of an established market—yet sometimes new entrants seemed to be competing in entirely new markets. This led to the distinction we discussed earlier between low-end and new-market footholds. Low-end disrupters think steel minimills and discount retailers come in at the bottom of the market and take hold within an existing value network before moving upmarket and attacking that stratum think integrated steel mills and traditional retailers.
By contrast, new-market disruptions take hold in a completely new value network and appeal to customers who have previously gone without the product. Consider the transistor pocket radio and the PC: They were largely ignored by manufacturers of tabletop radios and minicomputers, respectively, because they were aimed at nonconsumers of those goods. By postulating that there are two flavors of foothold markets in which disruptive innovation can begin, the theory has become more powerful and practicable.
Another intriguing anomaly was the identification of industries that have resisted the forces of disruption, at least until very recently. Higher education in the United States is one of these. Over the years—indeed, over more than years—new kinds of institutions with different initial charters have been created to address the needs of various population segments, including nonconsumers.
Many of these new entrants strived to improve over time, compelled by analogues of the pursuit of profitability: a desire for growth, prestige, and the capacity to do greater good. Thus they made costly investments in research, dormitories, athletic facilities, faculty, and so on, seeking to emulate more-elite institutions. Doing so has increased their level of performance in some ways—they can provide richer learning and living environments for students, for example. Yet the relative standing of higher-education institutions remains largely unchanged: With few exceptions, the top 20 are still the top 20, and the next 50 are still in that second tier, decade after decade.
Because both incumbents and newcomers are seemingly following the same game plan, it is perhaps no surprise that incumbents are able to maintain their positions. The answer seems to be yes, and the enabling innovation is online learning, which is becoming broadly available.
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