The principle in detail
Three steps through the principle: grasp it, place it, put it to work. Open each topic on its own.
The core messageCore statement and 3 clarifications
The danger often comes not from the better competitor but from the simpler, cheaper one that starts at the bottom or in a new market.
- It does not say
- That every innovation is disruptive. A mere improvement does not count, and neither does every successful attacker: by the strict definition, the ride-hailing service Uber is not disruptive.
- It does not say
- That every decline follows this path. It can hardly predict when the upheaval will come.
- It also says
- If you rebuild the new offering within your own processes and key figures, it usually fails precisely because of them.
The explanationThe incumbents do not fail because of bad management but because of good management.
The incumbents do not fail because of bad management but because of good management.
They listen to their most important customers, improve their products and increase their margins.
Because incumbents often improve their performance faster than most customers need, the newcomer eventually reaches the middle of the market. There it has a cost advantage that the old business model cannot match.
Similarly, in churches, simple formats such as home groups reach people whom the traditional worship service does not reach.
By what standard do you judge something new that starts below your level, and who is currently serving the people you consider unimportant?
The signs3 signs when you heed it · 3 when you overlook it
- When you see something new, you first ask who it is good enough for, not whether it meets your standard.
- You also look at customers you have lost or never won.
- A simple offering gets a unit of its own with its own key figures.
- You measure something new only against your own quality standard and dismiss it with a smile.
- Rising margins reassure you even though your market is shrinking.
- A low-cost offering has to prove itself within your existing processes and fails because of them.
The backgroundTradition T6 Business Strategy
- 1995Joseph L. Bower and Clayton M. Christensen
Disruptive Technologies: Catching the Wave
- 1997OriginClayton M. Christensen
The Innovator’s Dilemma
- 2015SupplementedClayton M. Christensen, Michael E. Raynor and Rory McDonald
What Is Disruptive Innovation?
- Tradition T6TraditionBusiness Strategy
Michael E. Porter, Richard P. Rumelt, Henry Mintzberg, Clayton M. Christensen, W. Chan Kim and Renée Mauborgne
See the tradition on the Origin page
Read more: the full background
From Clayton M. Christensen’s book “The Innovator’s Dilemma” (1997), anticipated in his article with Joseph L. Bower (1995). Supplemented by “The Innovator’s Solution” (2003) with Michael E. Raynor and the refinement of the concept with Michael E. Raynor and Rory McDonald (2015).
The research5 sources: 2 reviews, 1 theory, 1 classic, 1 primary study · 1995–2015 · with limitations of the research
- weak
- moderate
- strong
Well-documented case studies support the pattern, but a review found all the features in only a small share of the cases cited.
- 1995Joseph L. Bower and Clayton M. Christensen
“Disruptive Technologies: Catching the Wave”: leading firms align themselves with their current customers; new technology initially performs worse and starts in small or new markets.
- 2014Jill Lepore
“The Disruption Machine”: the theory is said to rest on selected case studies and to be overstretched.
- 2015Clayton M. Christensen, Michael E. Raynor and Rory McDonald
“What Is Disruptive Innovation?”: disruption is a process over time; Uber does not fit the classic pattern.
- 2015Andrew A. King and Baljir Baatartogtokh
“How Useful Is the Theory of Disruptive Innovation?”: 79 experts examined 77 cases; only about 9% showed all four features tested.
- The theory relies on selected case studies, and some firms whose demise was predicted are still leaders today.
- It explains a common decline, but not every decline, and says little about the timing of the upheaval.
- That incumbents “rarely” lose to better rivals has not been counted: the sources describe a pattern, not a frequency.
Read more: what research shows
In 1995, Joseph L. Bower and Clayton M. Christensen described why leading companies lose their position when new technologies emerge: they align themselves with the needs of their current customers and neglect technology that these customers do not yet value. Such technology initially performs worse and first finds buyers in small or new markets. In 1997, Clayton M. Christensen worked this out using disk drives, excavators and the steel industry. In 2015, together with Michael E. Raynor and Rory McDonald, he narrowed the concept: disruption is a process over time, not a sudden event, and not every successful attacker is disruptive. In 2015, Andrew A. King and Baljir Baatartogtokh had experts examine 77 cases cited by Clayton M. Christensen. Only about 9% showed all the features of the theory.
The related principles50 Resistance to the New · 72 Blue Ocean · 75 Experience Curve · 79 Exploration and Exploitation
To go deeper, see 50 Resistance to the New (why incumbents fend off the new for so long) and 75 Experience Curve (the newcomer quickly becomes cheaper and better as its volume grows)
72 Blue Ocean shows disruption through new markets
79 Exploration and Exploitation names the counterforce: if you only exploit, you overlook what is growing up from below
Read more: the full text
To go deeper, see 50 Resistance to the New (why incumbents fend off the new for so long) and 75 Experience Curve (the newcomer quickly becomes cheaper and better as its volume grows); 72 Blue Ocean shows disruption through new markets. 79 Exploration and Exploitation names the counterforce: if you only exploit, you overlook what is growing up from below.
The action steps5 things you can actually do
Write down which customers or groups you have deliberately given up in recent years, and find out who serves them today.
- Judge a new offering not by your standard but by that of the people who use it: is it good enough for them?
- Check whether your performance is growing faster than most of your customers need. Ask them what they actually use.
Give a simple, low-cost experiment a unit of its own, with its own budget, its own processes and its own key figures.
- Don’t call every innovation disruptive. Check whether it starts at the bottom or in a new market.
The reflection questions3 questions for you or for a conversation
- Which customers or tasks have you been glad to hand over in recent years, and who takes care of them today?
- By what standard do you judge a new offering that starts well below your level?
- Which improvement to your work does hardly anyone actually need?
Take your time with one question. Write down your answer – or talk it over with someone you trust.
The picture to rememberThe animation once more, with an explanation
- A flat mist-blue line shows what most people need
- A steep teal line rises far above it, with a few bright dots at the top
- Below, a small gold dot climbs step by step, dots move toward it until it crosses the flat line and the crowd shifts over to it
How the principle shows up in practice
Wikipedia and Britannica
First Encarta on CD-ROM, then the free Wikipedia written by amateurs displaced the printed Britannica, which ended its print edition in 2012 after 244 years.
Ken Iverson and Nucor
Starting in 1969, Nucor’s minimills use cheap scrap steel to conquer first rebar, then one segment after another, while the big integrated mills make sensible retreats.
Methodist circuit riders
Between 1776 and 1850, simple, cheap lay preachers on horseback turn the Methodists from a fringe group into the largest denomination in America.
Who are you not taking seriously?
Get your profile across all 12 groups in about 10 to 15 minutes.
Start the Strategy CheckGroup 9: Markets and Organizations
Guiding question: How does an organization win in the long run?
Stage 3 of 5: Choose the path
- TraditionBusiness Strategy
Michael E. Porter, Richard P. Rumelt, Henry Mintzberg, Clayton M. Christensen, W. Chan Kim and Renée Mauborgne
Where the 92 principles come from: eight traditions of strategy, from classical war theory to dealing with uncertainty.
More about the originBackground: WEGVISOR’s own selection from the strategy literature · More about the origin
