disruptive technology (disruptive innovation)

The terms disruptive technology and disruptive innovation are often misunderstood and misapplied. This happens so frequently that these terms have become almost meaningless buzzwords in many industries. Nevertheless, an understanding of what is and isn’t truly disruptive to a market can benefit all players, large and small.

Real disruptive innovations are not single technological advancements at one point in time. Instead, they can only be recognized over a period of time as the market changes.

The trajectory of a disruptive innovation usually follows this path:

1. A technological development or market plan allows a new player in a market to enter at a lower quality and price than existing players.
2. The new player captures consumers who are not covered The automobile is often incorrectly considered a disruptive technology. Early automobiles were expensive and only available to wealthy people. They didn’t disrupt the transportation market, which was still well served Instead, the disruptive innovation was assembly line manufacturing, introduced Electric cars and Tesla Inc. are often thought of as disruptive, but generally for incorrect reasons. Early Tesla cars entered the market at the high end. Also, the overall market for electric cars is more sustaining to the automotive industry as a whole, rather than disrupting incumbent players from the bottom up. Instead, the more disruptive aspects of Tesla’s approach are its fast development cycle, end-to-end supply chain control, and using in-house dealerships and repair shops instead of third-party ones.

   The disruptive nature of smartphones is also easily misunderstood. Early smartphones, including the first iPhone, were expensive high-margin items. They were a sustaining technology for the cellphone market. Instead, their disruptive nature was in other areas.

   The introduction of app stores offered low-cost alternatives to existing software packages. Smartphones also were a low-cost alternative method for internet access compared with a traditional desktop computer and fixed internet line. This led to smartphones disrupting the market for PCs.