[neilrahilly]

From the perspective of a startup, the most interesting aspect of Clayton Christensen's concept of a disruptive business is that incumbents will choose not to compete with it (at least at first). Disruptive businesses are either "new market", in which case they don't steal the incumbent's existing customers, or "low-end", in which case they take the incumbent's worst customers and the incumbent doesn't care. An example of the latter is the early PC market. Incumbents like Digital Equipment Corp chose not to pursue it. High-end mainframes had higher margins and prices. They were happy to cede the bottom of the market to newcomers, whose products seemed hopelessly cheap and crappy. Of course, the low-end quickly improves and takes more and more of the market. By the time DEC recognized this problem, it was too late. Same with the Japanese cars and electronics (which were junky at first), or minimills in the steel industry.

Sustaining innovations are incremental improvements that fit within the incumbent's business model. The incumbent can easily and lucratively apply them to their existing customers.

The disruptive/sustaining distinction is important for startups because, "Incumbents almost always win battles of sustaining innovations. Their superior resources and well-honed processes are almost insurmountable strengths. Incumbents, however, almost always lose battles where the attacker has a legitimate disruptive innovation." (http://hbswk.hbs.edu/item/3374.html)

Christensen's disruptive/sustaining distinction is mostly lost in the press about innovation, where "disruptive" is used to describe either. That's life in the English language.

Incidentally, I think disruption is more about business models, which often, but not always, apply new technology.