What does disruptive innovation really mean? Defining disruptive innovation seems simple and yet I have found no simple answers. Disruptive innovation means very different things to different people: some use as a synonym for “big innovation”; others equate it with novelty. And, as there is mounting pressure to “think different”, disruptive innovation gets great publicity. This may come at the expense of clarity in meaning. I’ve found that when the term is used a different meaning may be inferred almost every single time. It turns out that, several weeks ago, I sat down with John Mitchell, a principal at AMS’s Product & Process Innovation practice. During our discussion, we came to a common understanding of what disruptive innovation means. As John and I tried to define disruptive innovation, we started out with examples.
I/ Is the iPhone a disruptive innovation?
I asked him if he thought the iPhone was a disruptive innovation. I added that when the iPhone came out, Clayton Christensen said that he did not believe the iPhone innovation was a disruptive innovation; at least it wasn’t disruptive relative to other smartphones, such as the Blackberry. John mentioned that he agreed with Clay: he believes that the iPhone had not created a new market. He believes that the iPhone was a breakthrough innovation in this sense that it provided superior functionality compared to existing products.
So I guess this provides some understanding on the meaning of disruptive innovation. Disruptive innovation is different from breakthrough innovation. Breakthrough innovation provides superior functionality and superior performance based on an existing way of measuring performance. Disruptive innovation changes the basis of how performance is measured. In other words, once a disruptive innovation has been created, the way we measure performance changes.
II/ Is the iPad a disruptive innovation?
This is what happened with the iPad and the birth of the tablet market. Prior to the iPad, portability, user-friendliness and design had not been a key performance measure, as performance was more often defined as processing speed, hard drive capacity and RAM. But the advent of the iPad made portability and quick access to electronic data (emails, text messaging, browsing) a critical performance measure. It brought new consumers to the computer market. For example, senior consumers who had not owned and operated a computer before flocked to the iPad to enter the digital age. Finally, the iPad undermined the incumbents claim for value on the portable PC market: Microsoft and Intel could no longer capture large chunks of value on the tablet market considering that they were not suppliers of the iPad.
IV/ What are the disruptive innovations in the automobile industry today?
At that point we switched to Tesla, a high-end electric car manufacturer, and we applied to same kind of reasoning as described above. I asked John if he thought that Tesla was a disruptive innovation. Given that Tesla was competing on existing performance measures such as speed, fuel efficiency and design, then Tesla was a not a disruptive innovation per se, but rather a breakthrough innovation, according to John. For example, the video below suggests that performance be measured in terms of Horsepower, which is mainstream performance measure.
So then I asked him: are there any existing disruptive innovations in the automobile industry? At that point John mentioned Zipcars. Zipcars is a new kind rental car system as evidenced in the video below:
Zipcars are changing the way we use cars. Instead of buying a car, consumers rent and share cars. This is really changing the business model of the automobile industry. Owning a car incurs monthly expenses (gas, maintenance, insurance…) in addition to the cost of actually buying the car. All of this is changed when consumers rent rather than buy. And this is what Zipcar is introducing in the market.
Another characteristic of disruptive innovations is that brings in a new consumer segment. In other words, disruptive innovations turn non-consumers into consumers. For example, many people living in large cities don’t own a car because they don’t need to. But, Zipcars offer the possibility of sharing a car brings change: consumers enjoy the benefits of having a car without having to go through all the disadvantages that come with owning a car.
V/ Characteristics of disruptive innovations
So, if I were to summarize what a disruptive innovation is, based on my conversation with John, I would say that disruptive innovation involves:
- turning non-consumers into consumers
- changing how performance is measured
- changing the business model of the industry incumbents
These characteristics help to differentiate disruptive innovation from sustaining innovation. Sustaining and breakthrough innovations improve a performance on similar performance measures, unlike disruptive innovation which changes how performance is measured altogether. I hope this provides a clearer definition of what disruptive innovation really means.
- For another definition of disruptive innovation, please refer here and here
- For a description of the issues on the definition of disruptive innovation, please refer here
- For another perspective on what Clayton Christensen and his views on the iPhone and the iPad, please refer to this post
- Please refer to Scott Anthony, Mark Johnson, Joe Sinfield, and Elizabeth Altman’s The Innovator’s Guide to Growth