Introduction
Creativity and innovation are important part of any successful organization. Innovation arouses the interests of organization to explore new ideas and new ways to solve problems, while creativity generates new ideas, products, services and processes. Innovation and creativity require a departure from the status quo and the ability to recognize, envision and act on new opportunities.
Todays technological advances, shortening market cycles, and increasing challenger from established sectors lead to constant pressure to create new products and services faster and better. In this regard, Christensens Theory of Disruptive Innovation provides a useful framework for understanding how organizations can innovate and remain competitive by disrupting established sectors, bringing in new ways of engaging customers, and obtaining competitive advantage.
Christensens Theory of Disruptive Innovation
Harvard Business School Professor Clayton Christensen argues that markets are shaped by two distinct types of innovation: sustaining and disruptive. Sustaining innovations are incremental improvements in existing product or service features that aim to increase a products performance in a given market. Disruptive innovations, on the other hand, introduce different, often simpler, elements that allow companies to target lower-end customers and establish or enter a market. Christensens Theory of Disruptive Innovation states, therefore, that small companies with limited resources can compete with established firms, and ultimately define new markets and bring radical changes to business. The central premise of the theory is that established companies are often too focused on sustaining innovation, rather than dedicating resources to disruptive, and often difficult, innovations.
One of the most famous examples of a disruptive innovation is the introduction of digital photography in the 1980s. At the time, cameras sold by Kodak, then the market leader in photography, focused on operating at higher speed, higher quality and enhanced resolution. Its model was quickly overtaken by the lower quality and low-cost digital cameras produced by Japanese companies such as Nikon and Canon. This simple innovation gave photography access to more people, enabled it to reach greater segments of the market, and eventually resulted in an exponential growth in the industry.
Applying the Theory in Practice
In the business environment, the rapid pace of change requires organizations to stay open to disruptive innovations that can create massive shifts in their products and services, in order to remain competitive. Once a company identifies a new, disruptive technology or service that meets the needs of its customers, it needs to recognize the potential this technology has in changing the industry, in order to jump on it before anyone else. It needs to invest resources in developing a disruptive strategy that involves networking, researching, marketing, and production, so as to ensure a successful launch of the innovation.
In addition, it is important to understand that not all innovations are capable of becoming disruptive. Whether an innovation will be disruptive or not largely depends on its ability to bring something novel to the market and make it desirable. Another factor that affects an innovations potential for disruption is the size of the target market. For a market to become disrupted, it has to have a large enough population that is willing to accept new approaches and products. Finally, the availability of resources, such as capital and expertise, and the speed of response all affect the degree of disruption that an innovation can bring to an existing market.
Conclusion
Christensens Theory of Disruptive Innovation examines how small and nimble organizations, sometimes with limited resources, can break into and sometimes completely alter, existing markets. The theory has been instrumental in helping organizations understand the potential benefits of disruptive innovations as well as how to use them to their advantage. As the market environment keeps changing, organizations need to focus on identifying and investing in disruptive innovation, in order to stay competitive.
