| > A disruptive innovation occurs when long-standing assumptions in a marketplace are tested and successfully challenged by upstarts. A disruption innovation is a new way of doing things, often based on technology (but can be a different business model), that at first is not good enough for mainstream users. So it is no threat to incumbents, and no competitive response is provoked. But it is good enough for some other users and usages, and it can gradually improve in this safe backwater... until one day, it is good enough for mainstream users - but it also has some other benefits (that appealed to those other users), and so, suddenly, they switch. This is a disruption. The difficulty for incumbents is that (up til then), their customers didn't want it. They might even have tried to force it on their customers, but with no response. Because good management will listen to customers, and try to serve them, it makes it even harder for them to deal with approaching disruptions, even if they see them clearly. Another problem is that while incumbents may keep on improving their product (so it is still clearly, overwhelmingly superior to the disruption), the key to the effect is that their product has become more than good enough. So it doesn't matter that it's better it's like offering ever more water to a man who was thirsty, but is now full. Note that there are many parts to this scenario, and a candidate innovation might fall down at many points - it might not be possible to improve it enough for mainstream users; there might be a way for incumbents to co-opt it; a great company can sometimes disrupt themselves (cannibalizing their own sales); yet another disruption might improve enough before this one did, etc. Two big take-homes for me: - to be aware of what people want, not just making better widgets. - making a product that some people want, but that is not yet perfect and not yet ideal for them, is a good thing. |
After WWII hydraulic excavators were introduced to the market. They could only move a quarter of a cubic yard at a time, the sort of work that had previously been done by men with shovels. This nicely fit with the explosion of suburbs where these excavators could efficiently dig small trenches for water and sewer access.
The steam shovel companies ignored this, catering to their markets for bigger trenches for main water and sewer pipes and larger scale excavation (e.g. digging out foundations).
The companies making hydraulic excavators steadily improved, to the points where they could handle the above applications. At those points they quickly wiped out their entrenched steam shovel competitors, for they didn't have chains that could snap and lash back at the operator.
For the general reasons mentioned by the parent posting, these competitors woke up to the threat way too late, didn't have the expertise necessary to quickly compete and I'm pretty sure most/all that tried ran out of money before they could make the transition. One of the deadly things about disruptive innovation is that they can crater your revenues faster than your corporate culture can respond.
ADDED:
All that said, after reading the article, while the author does not clearly make the case, I get the feeling that "Teen Knowledge Work" as enabled by the Internet is indeed something like a disruptive innovation.
The Internet has massively leveraged would be and current "knowledge workers". Let's look at our ability to self-educate: previously, it was hard to be an autodidact if for no other reason than it was hard to find out the books you ought to read. Now that meta-information is easily available, in on-line course book lists, Amazon.com reviews, Wikipedia articles and of course many less formal venues.
With these resources, not a whole lot of cash (and things like forums where one can questions) the self-directed self-disciplined learner can get a pretty good education. It won't equal the one you can get from rubbing shoulder with a few thousand of the best and brightest at MIT or an IIT, but I suspect it's enough to start a serious knowledge worker career.
So to get back to the disruptive innovation concept, teens who previously (with rare exceptions) just couldn't come up to speed before they exited their teen/early 20s years, who were able to do lower quality "knowledge work", are now able to do much higher quality knowledge work.
(One detail that you need to take into consideration of all this is how the college degree has replace the now worthless high school degree and now illegal recruiting testing. And now things like a portfolio of accomplishments presented on the Internet can replace the college degree as a signal.)