strategic design & innovation

Distinguishing Disruptive and Sustaining Innovation

business models & platforms digital & 4IR technologies strategic foresight strategy

In 1995, Harvard professor Clayton Christensen published 'The Innovators Dilemma', a seminal work in which he coined the term 'disruptive innovation' that has become so popular today. Twenty years on in this month's Harvard Business Review, somewhat in response to the proliferation and misuse of this term, Christensen has again laid out the critical distinctions, as he sees them, between truly disruptive and sustaining innovations, and why these matter.

Disruptive innovations originate in two types of markets that incumbents are prone to ignore: 

  1. The lower end of the market: these innovations offer a level of performance that is not currently acceptable to mainstream markets, but a value proposition is perfectly acceptable to the lower end of the market.
  2. Completely new markets: these innovations take hold in previously overlooked and un-served market segments.

Sustaining innovations, on the other hand, deliver improved product performance. This may be achieved through the use of radically new technology, but if it is addressing and satisfying the needs of the existing market it is not disruptive. 

It can often take a very long time for truly disruptive technologies change the basis of competition. What the disruptive technology of today lacks in performance in comparison to the established, mass market product of today it is able to make up for in reliability, convenience and/or price. And the very attributes that make a disruptive technology worthless to mainstream markets are often their strongest selling points in new markets. 

In the meantime, progressive enhancements to products & services achieved through sustaining innovations will invariably lead to these products delivering performance levels that exceed the demands of the mass market. In other words they start to incorporate features and attributes for which the mass market perceives little value.

sarah leslie consulting disruptive innovation

A great example of a contemporary disruptor is Netflix, which has disrupted the entertainment industry through its use of 'over the top' video streaming technology. A low cost subscription model, burgeoning content catalogue and the increasing accessibility of high speed broadband services to assure viewing quality are causing people to abandon expensive, packaged cable services. 

It's at this point of 'performance oversupply' that a fundamental change in the basis of competition and disruption can occur as mainstream customers start to adopt the alternative offering in volume. 

Identifying both the potential for new disruptive technologies, and when such shifts are likely to occur in your market requires you to get out of the lab or office and into the field. To observe both your customers of tomorrow and your customers of today, and learn how they interact, or understand why they don't, with your product or service offering.

The fact that disruption occurs over an extended period is just one of several reasons why it is common for established incumbents to overlook disruptive new entrants until its too late. 

Empirical research also led Christensen to a critical observation: organisations can achieve success through being either a leader or a follower when it comes to delivering sustaining innovation, but first mover advantage is undeniable at that point when the basis of competition turns.

Christensen maintains that, whilst disruption theory cannot explain everything about innovation or organisational success or failure, the capability to manage the process of disruptive innovation and understand its true nature is critical.

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