Disruptive Innovation

Question 1

What is the definition of disruptive innovation?

Answer 1

• It transforms a product that is historically expensive and complicated (where only people with money/ expertise has access to it) - a disruptive innovation makes a product more affordable and accessible to a wider demographic that may not immediately want the product
• May be introduced as inferior, but is developed rapidly after its introduction to remove other competitors and become the market leader

Question 2

Draw a graph showing how disruptive innovation performs next to traditional technology

Answer 2

See Notion

Question 3

What are the main steps for identifying a disruptive innovation?

Answer 3

• It’s targeting people who aren’t traditional consumers or ones that are overserved by existing products
• It’s not as good as existing products based on historical measures of performance
• It’s simpler to use, more convenient, and more affordable
• There’s a technology enabler that can carry the new value proposition up-market
• The technology is paired with a business model innovation that allows it to be sustainable
• Existing providers are motivated to ignore the new innovation and aren’t threatened at the outset

Question 4

What is a dilemma for businesses in the context of disruptive innovation?

Answer 4

• The innovation dilemma involves deciding whether to improve current products for existing consumers or make other products more accessible and affordable to completely new consumer demographic
• Although, the trick is making something simple and affordable initially (probably lower quality) and then rapidly improving it to rival competitors
• Larger companies may not want to adopt this strategy as it could waste resources and lead to smaller margins - it could lead to having an inferior product for a long time - could affect customer view of company

Question 5

Explain technology means nothing without a business model using an example of a companies strategy

Answer 5

• No technology is disruptive by itself and needs a business model and a strategic approach to make it a disruptive innovation
• Southwest airline is an example - it had a great business model to capture value at a low level but needed the technology to become disruptive and push the business model strategy - it picked off customers from other airlines with lower pricing and from other transport options in a new market

Question 6

Example of disruptive innovation

Answer 6

digital camera over dslr