Archive for April 28th, 2012

April 28, 2012

Disruptive Innovation



A disruptive innovation creates 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 the new market and later by lowering prices in the existing market.

By contrast, 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; they may be either ‘discontinuous’ (i.e. ‘transformational’ or ‘revolutionary’) or ‘continuous’ (i.e. ‘evolutionary’).

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