Disruptive Innovation in a Nutshell

  • Disruptive innovations are simpler,cheaper, more, accessible products or services, often created by “two guys in a garage.”

  • These inferior products and services seemingly decimate an industry leader who keeps on making very profitable, perfectly good products better and better, outstripping the needs and pocketbooks of already well-served consumers.

  • The empirical evidence shows that  new consumers are very willing to “hire” a cheaper product or service to carry out a specific task if and only if that product is good enough to get the job done.

  • Disruptive goods and services are at first marketed to the non-consumer or a non-existent market altogether with little, if any, profit—at first.  This is known as the innovators dilemma.

  • The best-managed companies’ efforts to innovate are almost always ineffectual and most vulnerable to extinction: one only be reminded that there are no integrated steel mills, steam ships or buggy whip manufacturers left in America.

  • Remember Eastmen Kodak? Blockbuster Video? Borders? Encyclopedia Britannica? U.S Steel?  Digital Equipment Corp? Tower Records?  All these companies and products were decimated by disruptive innovations.