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;

Format: Print

Find at Harvard Register to Read

Citation:

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

Working Paper | HBS Working Paper Series | 2020

Shaping Nascent Industries: Innovation Strategy and Regulatory Uncertainty in Personal Genomics

Cheng Gao and Rory McDonald

In nascent industries—whose new technologies are often poorly understood by regulators—contending with regulatory uncertainty can be crucial to organizational survival and growth. Prior research on nonmarket strategy largely focuses on established firms in mature industries operating in novel domains where the rules of the game are underdeveloped, though such strategies are apt to differ for new ventures with limited resources and market power. How do ventures navigate regulatory uncertainty? To explore this question, we conduct an inductive multi-case research study in the nascent personal-genomics industry. Drawing on 86 interviews and extensive archival and qualitative data, we develop a theoretical framework that elucidates how ventures navigate regulatory uncertainty—specifying the range, content, and sequence of actions that ventures take to manage this uncertainty. The framework, organized around the sequential processes of anticipating, reacting to, and shaping regulations, introduces a novel logic of interaction—regulatory co-creation—that ventures can employ to shape emerging regulations. Taken together, our theory and findings challenge existing perspectives on strategy in nascent markets and shed new light on the dynamic interplay between ventures and regulators during the emergence of new technology industries.

Keywords: entrepreneurship; technological change; innovation; strategy; qualitative methods;

Citation:

Gao, Cheng, and Rory McDonald. "Shaping Nascent Industries: Innovation Strategy and Regulatory Uncertainty in Personal Genomics." Harvard Business School Working Paper, No. 20-095, March 2020. View Details

Cite View Details

For a new market category to materialize, ventures must actively bring it into existence. Yet it remains a mystery how entrepreneurs, whose resources are stretched thin, can accomplish this task. Prior research emphasizes the importance of market-shaping but overlooks its impact on ventures. Through an inductive multiple-case study of a new financial-technology category, I develop theory centered on the conspicuous divergence in ventures’ cultural-resource use. My framework describes how the use of such resources co-evolves with the nascent market category, influencing the venture’s own trajectory. I also identify ways in which market-shaping can rebound back at a venture unexpectedly, contributing to strategic inflexibility and inertia. I pursue the contributions of the framework and discuss its implications for category creation, cultural entrepreneurship, and strategy in nascent markets.

Faculty & Research

What Is Disruptive Innovation?

Abstract

Citation:

About the Author

More from the Author