1_Introduction Flashcards
What is disruptive innovation?
A process by which a product or service takes root in simple applications at the bottom of a market - typically by being less expensive and more accessible.
Give a good example of disruptive innovation
Netflix disrupted traditional video rental industry
What are disruptive innovation characteristics?
- Brings new value
- Can only be sold in niche markets (at first)
What is the difference between sustaining & disruptive innovation?
Sustaining innovation: maintains market leadership through improving
Disruptive: pioneering through exploring, inventing.
What is the innovator’s dilemma?
It’s the zone between current needs (sustaining innovation) and future needs (disruptive innovation)
What are questions related to the innovator’s dilemma?
- Will they mature enough?
- Could they play in our league?
- Should we cannibalize our competitive advantage in the short term for long-term gain?
What are the 5 principles of disruptive innovation?
- Firms depend on customers and investors for resources
- Small markets don’t solve the growth needs of large firms
- Markets that don’t exist cannot be analyzed
- Firm’s capabilities defines its disabilities
- Technology supply may not equal market demand
What should firms do in reply to Principle 1?
They should give responsibility for disruptive innovation to organizations whose customers need them
What should firms do in reply to Principle 2?
Give the responsibility to seize the opportunity to a company that size fits the market
What should firms do in reply to Principle 3?
They should do discovery-driven planning.
What should firms do in reply to Principle 4?
- Acquire a different organization
- Change the processes
- Creating capabilities through spin-out organizations
What should firms do in reply to Principle 5?
Creating better products and higher profit margins
