What are the characteristics of a disruptive innovation.
The terms disruptive technology and disruptive innovation are often misunderstood and misapplied. This happens so frequently that these terms have become almost meaningless buzzwords in many industries. Nevertheless, an understanding of what is and isn't truly disruptive to a market can benefit all players, large and small.
Real disruptive innovations are not single technological advancements at one point in time. Instead, they can only be recognized over a period of time as the market changes.
The trajectory of a disruptive innovation usually follows this path:
A technological development or market plan allows a new player in a market to enter at a lower quality and price than existing players.
The new player captures consumers who are not covered by existing products. These consumers can be entirely new or existing consumers who are less demanding. These lower-priced products are less profitable to the new company than the higher-priced products for incumbent players.
The innovative technology or strategy continues to improve to the point that the quality of the product matches or exceeds existing products. The new player can now enjoy the greater profitability of the high-end or mainstream market.
The automobile is often incorrectly considered a disruptive technology. Early automobiles were expensive and only available to wealthy people. They didn't disrupt the transportation market, which was still well served by other modes of transport such as locomotive, boat, and horse and buggy.
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