Introduction In the mid to late 1990’s, the term “disruptive technology” was first used by Clayton Christiansen in his Harvard Business Review article Disruptive Technology. Since then, the term has grown to encompass a great deal. People also increasingly use it to mean more than what Mr. Christiansen originally described it to be. In fact, he looks back and feels that the words he used were not the best choice to describe his theory. To gain a better understanding of what this, or any, term means, the first place to go is the dictionary. In the case of Christiansen’s theory, the words disruptive, technology, and innovation are at the foundation. According to Merriam-Webster (2016) disruptive is defined “to cause (something) to be unable
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The term “disruptive technology” describes how a product or service starts at the bottom of a market, or in a completely different market, and gradually ascends the market eventually pushing out established competitors. Disruptive technologies are successful because sustaining technologies are what most companies focus on, leading them to produce products customers find too expensive, complicated, or elaborate. This works well for them because charging high prices at the high end of the market is the most profitable. On the other hand, such a focus leaves the low end of the market wide open for disrupters to offer cheap and simple products to consumers who have been without or cannot afford a higher end product. Incumbents, or established organizations, do not see the entrants, disrupters in this case, as threats because they are inferior and targeting the “unattractive” customers. A Business (2012) article referred to disruptive technologies as “too small to be interesting to large established firms”. Larger organizations’ direction is on continued growth, not emerging markets with lower …show more content…
Each comes with their own advantages and disadvantages. Large companies may become “parent” to a separate “child” business in order to be a disruptor instead of one day being disrupted. Managers of both should be aware of the positives and negatives in order to better understand one another and ultimately make the best choices for themselves.
The Academy of Management Journal published an article discussing these in 2009. They looked at the computer industry in the years from 1975 through 1994 to compare children of large corporations versus independent startups. It was discovered that startups were more focused and stronger legitimators while children could rely on their parents financing and expertise (p. 180). Resources given to children increase their odds of survival and allow them a stronger beginning such as passing along customer ties.
As previously discussed, startup disruptors offer technologies with poorer performance and cheaper, simpler, more convenient offerings. This is often not attractive to existing customers of established businesses, but do appeal to less demanding buyers whose only other option is non consumption. Smaller disruptors also have the advantage of flexibility and the adaptability that larger firms do not
The term “disruptive technology” describes how a product or service starts at the bottom of a market, or in a completely different market, and gradually ascends the market eventually pushing out established competitors. Disruptive technologies are successful because sustaining technologies are what most companies focus on, leading them to produce products customers find too expensive, complicated, or elaborate. This works well for them because charging high prices at the high end of the market is the most profitable. On the other hand, such a focus leaves the low end of the market wide open for disrupters to offer cheap and simple products to consumers who have been without or cannot afford a higher end product. Incumbents, or established organizations, do not see the entrants, disrupters in this case, as threats because they are inferior and targeting the “unattractive” customers. A Business (2012) article referred to disruptive technologies as “too small to be interesting to large established firms”. Larger organizations’ direction is on continued growth, not emerging markets with lower …show more content…
Each comes with their own advantages and disadvantages. Large companies may become “parent” to a separate “child” business in order to be a disruptor instead of one day being disrupted. Managers of both should be aware of the positives and negatives in order to better understand one another and ultimately make the best choices for themselves.
The Academy of Management Journal published an article discussing these in 2009. They looked at the computer industry in the years from 1975 through 1994 to compare children of large corporations versus independent startups. It was discovered that startups were more focused and stronger legitimators while children could rely on their parents financing and expertise (p. 180). Resources given to children increase their odds of survival and allow them a stronger beginning such as passing along customer ties.
As previously discussed, startup disruptors offer technologies with poorer performance and cheaper, simpler, more convenient offerings. This is often not attractive to existing customers of established businesses, but do appeal to less demanding buyers whose only other option is non consumption. Smaller disruptors also have the advantage of flexibility and the adaptability that larger firms do not