...Disruptive innovation Explanation of the term A disruptive innovation is an innovation that helps create a new market and value network, and eventually disrupts an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market. Opposite type of innovation In contrast to disruptive innovation, a sustaining innovation does not create new markets or value networks but rather only evolves existing ones with better value, allowing the firms within to compete against each other's sustaining improvements. Sustaining innovations may be either "discontinuous" (i.e. "transformational" or "revolutionary") or "continuous" (i.e. "evolutionary"). Sustaining innovations are typically innovations in technology, whereas disruptive innovations change entire markets. For example, the automobile was a revolutionary technological innovation, but it was not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles. The market for transportation essentially remained intact until the debut of the lower priced Ford Model T in 1908. The mass-produced automobile was a disruptive innovation, because it changed...
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...By Mashell Chapeyama Disruptive innovation There are six key attributes of disruptive innovation which managers must strive to follow. These are as follows: 1. Disruptive innovation spur growth 2. Disruptive business either creates new markets or takes the low end of an established market 3. Disruptive opportunities require a separate business planning process 4. Do not try to change your customers, help them 5. Integrate across whatever is not good enough 6. Be patient for growth but impatient for profitability This essay will briefly look at these and identify one firm to concentrate on. One of keys to building a new market is through disruptive innovation. There are two ways in which disruptive innovation can be achieved. One way is by coming up with simpler products and services to meet the needs of those people who could not afford the more expensive versions of product or service. The other way is through sustaining disruptions. This is where an organization can improve on their current products and services. Disruptive innovation can either create new markets or by targeting the lower end of the market. This is through the creation of a newer context to the one in which previous products and services could meet the needs of the clients. However, when introducing a new product or service it would be important to come up with a new plan of business for that product or service. The idea is that we must not work to change the preferences and needs of our current...
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...ENTRY 2, DISRUPTIVE INNOVATIONS In this essay I will describe and explain the causes and consequences of disruptive innovation. Firstly I will write about what dualism is, why it is important and how to achieve it. I will continue with describing difficulties, which may occur on a company’s path towards it, namely overshooting and inability to recognize the start of a new industry cycle. Further on, I will go deeper in the reasons, why incumbents fail to recognize the new entrants on the market, specifically “attack from below” and other discontinuous patterns of change. In the end I will describe some of the responses taken by established companies to disruptive technologies. In today’s world when competition is such a big factor, organizations must face the paradoxical challenges of "dualism" to be able to compete in long term. Dualism means being able of functioning efficiently today while innovating effectively for tomorrow. To compete in the long term, every corporation must understand and manage both sets of concerns simultaneously. (Paap, Katz, 2004) If the companies do not manage to face the challenges of dualism, they make themselves potential victims of disruptive technologies. Hence, achieving dualism means successfully surviving disruptive technologies. The first step a company has to make towards that is recognising them, but why it is so difficult for incumbents to recognise disruptive technologies? A limitation companies face in process of achieving...
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...of the DVD and Blu-ray rental game by raising the prices of their DVDs and Blu-rays. Netflix is spending more money to increase the size of their online library for streaming. The two companies that are battling it out to be the king of the rental industry are Redbox, a company owned by Coinstar Inc., and Blockbuster. This paper will focus on how Redbox entered the market through Disruptive Innovation and what Redbox needs to do to better position themselves in a volatile market place. I will also look at the mistakes Blockbuster made and offer solutions on how Redbox can avoid the organizational decline that Blockbuster experienced. I use Wall Street Journal and peer-reviewed academic journals for my references. To understand the full scope of how Redbox entered the market I will look at the Disruptive Innovation Theory. Disruptive Innovation Theory is a term that was coined by Clayton Christiansen. Clayton Christiansen is a professor at Harvard Business School. He has written a number of books on the subject. In an interview done by Smith, Christensen defines disruptive Innovation Theory as, “a technology that brings a much more affordable product or service that is much simpler to use into a market. And so it allows a whole new population of consumers to afford to own and have the skill to use a product or service, where as historically, the ability to access was limited to people who have a lot of money or a lot of skill.” (Smith, September, 1 2007, p.1)...
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...A strategic approach to disruptive technologies 1 A strategic approach to disruptive technologies Disruptive change requires new strategies. When conditions change rapidly, organisations find their former approaches which have led to success in the past, are no longer effective. It can be hard to let go of these approaches if they have been a source of competitive advantage. This leads many managers to assume that successful responses to disruptive change are a matter of luck. But it is possible to craft strategies to best exploit opportunities ahead of the competition. Disruptive technologies/ disruptive innovations Harvard professor Clay Christensen coined the term disruptive technology, which he later renamed disruptive innovation. He identified that it was not the technology itself which was disruptive, but its impact on strategy or business models. Christensen’s theory developed the previous body of literature about discontinuity of organisational change. In summary: 1. A disruptive technology emerges. Initially it cannot match the performance of the existing dominant technology, on the factors which customers traditionally value. 2. The distinctive features of the disruptive technology are valued by a small fringe segment of customers, and increasing numbers of new customers. It is also typically cheaper, simpler, smaller or more convenient. 3. Incumbent players in the market conclude that investment in the disruptive technology is irrational, since their most...
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...DISRUPTIVE INNOVATION Kabi Portland State University Fall 2013 Abstract The concept about the robotic has always been the most attracting topic, especially to scientists and engineers. Robots, once the stuff of science fiction, are becoming part of our everyday lives. As to say, robotics are what people made to serve the humankind, and they are becoming one of the greatest disruptive innovation. The top three most famous robots are the Asimo, Kawada HRP-4 and Alderbaran Nao. When we talk about robotics, android, humanoid and cyborg are always mentioned. These terms are part of robotics. In this report, we will identify and analyze the use of robotics in human lives, and clearly understand why robotics have become disruptive technology. History and Context The original meaning of the word robot comes from a Slavic word "robota", which means labor (Wikipedia). The Maschinenmensch (machine-human) was the first depiction of robot to appear on film in 1927. Moreover, In 1942, Issac Asimov formulated his Three Laws of Robotics, and in 1948, Norbert Wiener formulated the principles of cybernetics, the basis of practical robotics (Wikipedia). In other word, the principles of cybernetics were the base for the development of robotics. Historically, many inventions such as the steam engine by James Watt can be considered as the first step of the robot's developmental progress. Recently, there are many robotic development such as the cute-looking humanoid iCub that can play...
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...The apparel retailing industry is a highly competitive industry. One major challenge most companies face lies in being able to predict and respond swiftly to changing fashion trends. For the purpose of studying the industry model, Gap Inc. business model will be used. Gap Inc. Business Model Gap Inc. is a specialty retailing company which offers clothing, accessories and personal care products for men, women, children and babies under five brand names - Gap, Old Navy, Banana Republic, Piperlime and Athleta. Gap Inc. segments its market by income, with Banana Republic serving the high-end market, Old Navy catering to the lower end market by delivering cheaper apparel and Gap lying in between with apparel of moderate prices. Gap Inc. also segments its market by lifestyle, with Banana Republic serving mainly the working population by selling professional attires, Old Navy catering to the young and families while Athleta serves active women inclined towards sports. The range of diversified brands gives Gap Inc. its competitive advantage as it is able to reach out to more customers through the different value propositions that each brand offers. Other than offering trendy designs, Gap Inc. also provides value to customers through its strong brand name established worldwide. Gap Inc. has expanded multiple brands internationally and currently owns 3,000 company-operated stores and 200 franchise stores over 40 countries. Other than opening stores, Gap Inc. also has an e-commerce...
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...ETM / IEL Working Paper Disruptive Innovation in Emerging Markets: Strategies Used in India and China Ruan Y., Hang C.C., Subramanian A.M. No. 01/12 Division of Engineering & Technology Management (D-ETM) Institute of Engineering Leadership (IEL) Faculty of Engineering 1 Disruptive Innovation in Emerging Markets: Strategies Used in India and China Ruan Y., Hang C.C., Annapoornima M.S. Abstract The appropriate type of innovation which can meet the needs of the mass population in the bottom of pyramid (BOP) has not been studied much in the literature. Based on the theory of disruptive innovation, we offer 11 cases from India and China – the two biggest emerging markets to show that disruptive innovation could be an appropriate, feasible, and powerful innovation force to the companies and the economies involved. We also examined the R&D strategies used in these cases based on the framework proposed by Yu & Hang (2011) and found that 3 out of the 4 strategies commonly used in the cases from developed markets were also applied in the cases from emerging markets. In addition, we have identified 3 unique strategies which emerged from the cases from India and China, namely frugal engineering, modularization, and drastic manufacturing cost reduction. Based on the frequency of the usage of these strategies, we drew practical implications for local companies and multinational companies. Our study also provides critical insights to policy makers...
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...INFLUENCE OF DISRUPTIVE INNOVATIONS ON NEW AND EXISTING BUSINESS MODELS. Introduction A disruptive innovation can be simply referred to as the application of technological advancement, product, or service that eventually overturns the existing dominant technology or status quo product in the market. Disruptive innovations are innovations that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network (over a few years or decades), displacing an earlier technology. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect, typically first by designing for a different set of consumers in a new market and later by lowering prices in the existing market. Some examples of disruptive innovations include: telephones replacing telegraphs, cell phones replacing land lines, digital photography replacing films etc In today’s complex, dynamic business world, having a disruptive innovation capability is mandatory, both for growing a business and protecting existing markets. But leading disruptive innovation requires new mindsets and behaviors, for leaders themselves and for the organizations that develop them. Disruptive Innovation is not a break through innovation that makes good products a lot better; it transforms a products that is expensive and complicated as such only few people with a lot of money could afford it. Disruptive Innovation makes...
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...Disruptive Innovation: A new era of Crowdsourced Data Analytics! Abstract: The existing business paradigm of data analytics is set for a transformation. Today, companies are experimenting to replicate the “Outsourced data analytics” model to “Crowdsourced data analytics”. Companies like Kaggle, Crowdanalytix and others are hitting the headlines of top analytics blogs across the globe. The reason is that the new business model promises a drastic decrease in the cost of analytics for companies long with the flexibility to get the problem solved anytime with much less effort. In short, it’s not just crowdsourcing that is the novelty of the concept, but the manner in which it is put to use that steals the show. Abstract: The existing business paradigm of data analytics is set for a transformation. Today, companies are experimenting to replicate the “Outsourced data analytics” model to “Crowdsourced data analytics”. Companies like Kaggle, Crowdanalytix and others are hitting the headlines of top analytics blogs across the globe. The reason is that the new business model promises a drastic decrease in the cost of analytics for companies long with the flexibility to get the problem solved anytime with much less effort. In short, it’s not just crowdsourcing that is the novelty of the concept, but the manner in which it is put to use that steals the show. General Management General Management MBA Core, 2nd Year MBA Core, 2nd Year Ayush Malhotra NMIMS,Mumbai Ayush Malhotra ...
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...17. Disruptive Innovation by Clayton M. Christensen. How to cite in your report. A disruptive technology or disruptive innovation is an innovation that helps create a new market and value network, and eventually goes on to disrupt an existing market and value network. The term is used in business and technology literature to describe innovations that improve a product or service in ways that the market does not expect. Although the term disruptive technology is widely used, disruptive innovation seems a more appropriate term in many contexts since few technologies are intrinsically disruptive; rather, it is the business model that the technology enables that creates the disruptive impact. Chapter Table of Contents 17Disruptive Innovation 17.1 Introduction 17.2 The Disruptive Innovation Model 17.2.1 Disruption at Work: How Minimills Upended Integrated Steel Companies 17.2.2 The Role of Sustaining Innovation in Generating Growth 17.2.3 Disruption Is a Relative Term 17.2.4 A Disruptive Business Model Is a Valuable Corporate Asset 17.3 Two Types of Disruption 17.3.1 New-Market Disruptions 17.3.2 Low-End Disruptions 17.4 Shaping Ideas to Become Disruptive: Three Litmus Tests 17.4.1 Could Xerox Disrupt Hewlett-Packard? 17.4.2 Conditions for Growth in Air Conditioners 17.5 Afterword 17.6 Acknowledgements 17.7 Appendix: A Brief Description of the Disruptive Strategies of the Firms in Figure 4 17.8 Commentary by Donald A. Norman 17.8.1 The theory is easy to...
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...Disruptive Business Model The word Disruptive is used when referring to surprising new entrants into an industry, new competitors with new technology and sudden competition coming from unlikely sources. It means in business and technology, that sudden changes occur to improve the product or service in different ways that the market does not expect. There are many companies which used to follow the old stream method for their business strategy, but if we have a look in recent years we can see that the companies those who comes along with new innovation and technology with a new ‘disruptive’ business plan, was able to make a disruption in the industry and was able to capture the market share from its competitors. There is also a correlation between disruptive business and disruptive innovation .It is often said that ‘innovation has something to do about being positively different from competitors’. It is about being different in a way customers love. Especially it works better in either ways when the economy is static or mild, or the market share is already captured –companies should find a different business model to disrupt the market in order to sustain or gain market share. For example –Southwest Airlines introduced LCC (low cost carrier) model which includes: * Flying one model of plane rather than several * A point to point route structure rather than having several stop over * One class of service rather than many * No meals, no assigned seating. Their...
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...opportunities that can arise from the activities of change. Well trained managers must be capable of understanding exactly what types of change the existing organization has the capacity to handle. Successful companies generally do well at responding to evolutionary changes within their market as this is a natural cycle of business, where the run into issues or often have trouble handling is the initiating revolutionary changes in their markets or dealing with disruptive changes. The article states that, “Disruptive innovations create an entirely new market through the introduction of a new kind of product or service, one that’s actually worse, initially, as judged by the performance metrics that mainstream customers’ value. These innovations were disruptive in that they didn’t address the next generation needs of leading customers in existing markets” (Christensen, Overdorf, 2000). This being the reason larger companies often do not compete and end up surrendering to emerging growth markets because small disruptive companies are more likely capable of pursuing them. The article discusses altering management or reengineering programs to deal with and cope with the change rather than surrendering. Managers must find a way to create a new sp[ace within their...
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...Crossing the Chasm What’s New? What’s Not? Strategic Management of Emerging Technology Hult School of International Business May 23, 2014 Disruptive Innovation Sources of Wealth Creation in the Current Decade • Eating other people’s lunch • Software eats hardware • Op ex eats cap ex • Services eat products • Leveraging next-generation technology • • • • Social Mobile Analytics Cloud 2 Marketing Disruptive Innovation • High Risk What Makes High-Tech Marketing Different? • Unproven products and promises • Incompatible and incomplete infrastructure • Social resistance to change • Low Data • No product history • No company track record • No best practices 3 Category Maturity Life Cycle Indefinitely elastic middle The Evolution of a Disruptive Innovation Secular Growth Revenue Growth Cyclical Growth Secular Decline A Emerging Market B Growth Market C Mature Market D Declining Market Catch Next Wave Fault Line! E End of Life Technology Adoption Life Cycle Focus for today 4 Time The Technology Adoption Life Cycle The Initial Dynamics of Disruptive Innovation 5 Innovators - Technology Enthusiasts 6 Innovators - Technology Enthusiasts • Primary Motivation: • Learn about new technologies for their own sake • Key Characteristics: • Strong aptitude for technical information • Like to alpha test new products • Can ignore the missing elements • Do whatever they...
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...McKinsey Global Institute May 2013 Disruptive technologies: Advances that will transform life, business, and the global economy The McKinsey Global Institute The McKinsey Global Institute (MGI), the business and economics research arm of McKinsey & Company, was established in 1990 to develop a deeper understanding of the evolving global economy. Our goal is to provide leaders in the commercial, public, and social sectors with the facts and insights on which to base management and policy decisions. MGI research combines the disciplines of economics and management, employing the analytical tools of economics with the insights of business leaders. Our “micro-to-macro” methodology examines microeconomic industry trends to better understand the broad macroeconomic forces affecting business strategy and public policy. MGI’s in-depth reports have covered more than 20 countries and 30 industries. Current research focuses on four themes: productivity and growth, the evolution of global financial markets, the economic impact of technology and innovation, and urbanization. Recent reports have assessed job creation, resource productivity, cities of the future, and the impact of the Internet. MGI is led by McKinsey & Company directors Richard Dobbs and James Manyika. Yougang Chen, Michael Chui, Susan Lund, and Jaana Remes serve as MGI principals. Project teams are led by a group of senior fellows and include consultants from McKinsey’s offices around the world...
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