What Is Disruptive Innovation?

Clayton M. Christensen; Michael  Raynor; Rory  McDonald

Article | Harvard Business Review | December 2015

What Is Disruptive Innovation?

by Clayton M. Christensen, Michael Raynor and Rory McDonald

Abstract

For the past 20 years, the theory of disruptive innovation has been enormously influential in business circles and a powerful tool for predicting which industry entrants will succeed. Unfortunately, the theory has also been widely misunderstood, and the "disruptive" label has been applied too carelessly anytime a market newcomer shakes up well-established incumbents. In this article, the architect of disruption theory, Clayton M. Christensen and his coauthors, correct some of the misinformation, describe how the thinking on the subject has evolved, and discuss the utility of the theory. They start by clarifying what classic disruption entails—a small enterprise targeting overlooked customers with a novel but modest offering and gradually moving upmarket to challenge the industry leaders. They point out that Uber, commonly hailed as a disrupter, doesn't actually fit the mold, and they explain that if managers don't understand the nuances of disruption theory or apply its tenets correctly, they may not make the right strategic choices. Common mistakes, the authors say, include failing to view disruption as a gradual process (which may lead incumbents to ignore significant threats) and blindly accepting the "Disrupt or be disrupted" mantra (which may lead incumbents to jeopardize their core business as they try to defend against disruptive competitors). The authors acknowledge that disruption theory has certain limitations. But they are confident that as research continues, the theory's explanatory and predictive powers will only improve.

Keywords: Disruptive Innovation;

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Citation:

Christensen, Clayton M., Michael Raynor, and Rory McDonald. "What Is Disruptive Innovation?" Harvard Business Review 93, no. 12 (December 2015): 44–53.

Executive Summary:
With emerging-market giants such as Brazil, Russia, India, and China experiencing slowdowns, investors, entrepreneurs, and multinationals are looking elsewhere. They’ve been eyeing frontier economies such as Nigeria and Pakistan with great interest—and enormous trepidation. Can one find serious growth opportunities amid extreme poverty and a lack of infrastructure and institutions?
The answer, the authors argue, is yes. The key lies in market-creating innovations: products and services that speak to unmet local needs, create local jobs, and scale up quickly. Examples include MicroEnsure, which has made insurance affordable for 56 million people in emerging economies, and Galanz, which has brought microwave ovens to millions of Chinese consumers previously considered too poor to buy such an appliance.
What’s more, the essentials of development can be “pulled in” by market-creating innovators—and over time, governments and financial institutions tend to offer their support.

This short case, meant for pairing with HBS case 615-013 “AmazonFresh: Rekindling the Online Grocery Market,” explores Amazon’s rationale for acquiring Whole Foods.

Nypro is the world's leading injection molder of precision plastic parts, operating a global network of 21 plants. Nypro's strategy is for each plant to offer identical capabilities, because its customers are global companies with worldwide sourcing needs. The case describes the way Nypro manages product and process innovation across the global plant network.

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What Is Disruptive Innovation?

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