Disruptive innovation, a term of art coined by Clayton Christensen, Kim B. Clark Professor of Business Administration at Harvard Business School, describes a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.
Often organizations develop products without considering customers’ needs. As a result, they produce products or services that are actually too sophisticated, too expensive, and too complicated for many customers in their market. This is a traditional strategy to succeed. By charging the highest prices to their most demanding and sophisticated customers at the top of the market, companies achieve the greatest profitability.
However, by doing so, companies open the door to “disruptive innovations” at the bottom of the market. An innovation that is disruptive allows a whole new population of consumers at the bottom of a market access to a product or service that was historically only accessible to consumers with a lot of money or a lot of skill.
Disruption is a positive force. Disruptive innovations are not breakthrough technologies that make good products better. They are innovations that transform sectors to make products affordable and convenient.
In the video below, Clayton Christensen explains how we can use disruptive innovation to make healthcare more affordable and accessible. Key to this is bringing technology to clinics, doctor’s offices and patient’s homes, then driving the technology to become more sophisticated.