Disruptive Innovation (Christensen, 1997)

Disruptive Innovation (Christensen, 1997)

Overview

Disruptive Innovation theory explains how smaller firms with fewer resources can successfully challenge established incumbents. Disruption occurs when entrants target overlooked segments (low-end or non-consumers) with simpler, cheaper offerings, then move upmarket as performance improves. Incumbents rationally focus on profitable mainstream customers and fail to respond until it is too late.

When to Use

Trigger conditions:

• User asks why a startup with an inferior product is gaining market share
• User needs to evaluate whether a new entrant is a disruptive or sustaining threat
• User wants to design a market entry strategy targeting overserved customers
• User mentions "disruption", "low-end market", or "good enough product"

When NOT to use:

• For sustaining innovation management (incremental improvements) -> use stage-gate or innovation funnel
• For platform-based competition -> use grad-platform-economics
• For analyzing national-level innovation systems -> use grad-diamond

Assumptions

IRON LAW: Disruption Comes from BELOW

Disruption originates from the LOW END or NEW MARKET — never from a
superior product attacking head-on. Incumbents fail because they
OVER-SERVE mainstream customers, creating a performance overshoot that
opens space for simpler, cheaper alternatives.

If the entrant competes on the SAME performance dimensions as the
incumbent, it is sustaining innovation — NOT disruption.

• Performance trajectories improve faster than customer needs evolve
• Incumbents are rational — they chase higher margins upmarket
• Disrupted markets have identifiable overserved segments

Methodology

Step 1: Map Performance Trajectories