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Understanding disruptive innovation and sustaining innovation

Michael Feder

Written by Michael Feder

Kathryn Uhles

Reviewed by听Kathryn Uhles, MIS, MSP,听Dean, College of Business and IT

Young male entrepreneur smiling and working in a coffee shop

Innovation is critical for long-term business success, particularly if you鈥檙e an entrepreneur. This means companies have to come up with new ideas or improve current ideas in ways that make customers鈥 lives easier. This might take the form of a new product, a service or even a new way of looking at an old problem.

In his work , professor Clayton Christensen underlines the importance of improvement by identifying how a company can fail even if it does all the right things. Sustaining innovations 鈥 technologies that improve performance 鈥 can fail when offer more affordable or creative solutions.

What is sustaining innovation?

An example of sustaining innovation is a product that provides a more satisfying customer experience than previous products and improves product performance. This occurs when companies create products that outperform the competition in their market. The product鈥檚 vendor achieves higher profits as customers recognize the product鈥檚 value.

Sustaining innovations are often built gradually, such as when products grow more effective to meet customer demands. For example, customers might request that companies add a new feature to an existing product. In other cases, companies might proactively develop a product based on their assumptions about what their customers might find useful.

A sustaining innovation represents the natural progression of a product as it generally becomes more useful for customers, thereby prolonging the product鈥檚 life span in the market.

Examples of sustaining innovation

Sustaining innovation exists wherever companies improve products to satisfy customer requests or to keep pace with competitors. Here are a few notable examples:

  • Added smartphone features like better cameras, increased battery life, larger screens and enhanced processing power
  • Automotive features like remote start or self-parking
  • Credit card features like cash-back options, airline miles and points for grocery purchases

Many sustaining innovations don鈥檛 represent a complete overhaul of a product or service. Instead, they鈥檙e often controlled changes meant to improve the consumer experience in a specific way. While they won鈥檛 create an entirely new market, sustaining innovations help solidify a company鈥檚 standing in a particular industry.

What is disruptive innovation?

, a disruptive innovation offers a product, service or business model to a niche market that has been overlooked. Although disruptive innovation isn鈥檛 always for niche markets, whichever market it鈥檚 in, it鈥檚 meant to reset industries through solutions that are impactful for customers, resulting in a competitive advantage. Often, companies become disruptors by creating entirely new products, or a more cost-effective approach, by repurposing old technologies.

In many cases, disruptive technology also makes an existing product or service available to a new market. It might reduce the cost of a traditionally expensive item, for instance, allowing more people to enjoy it.

Examples of disruptive innovation

More than anything, disruptive innovations can render previously successful companies obsolete by offering a new product or way of doing things. Here are some examples:

  • for the mainstream market, which took a substantial chunk of the market from movie theaters and made video rental stores a thing of the past.
  • while simultaneously allowing homeowners to profit in a traditionally hotel-led hospitality space.
  • One company, originally launched as an online bookstore, and changed how all products (not just books) were sold and purchased around the world.
  • , offering mainstream customers unlimited licensed music for a flat fee, which was a clear upgrade over per-song purchases.

These and other disruptive innovations did more than add on to an existing popular product. They changed the way entire markets operated, allowing customers to experience products or services in a new way.

The role of technology in disruptive innovation

To qualify as disruptive, innovativeproducts or services can be made available to new markets or听. Technology is critical in helping companies achieve both these goals.

Technology is often the main reason companies can reduce the cost of a particular product or service. For example, a new manufacturing process might help reduce costs, improve productivity or reduce the size of a company鈥檚 production line. These lowered costs can make certain products 鈥 once available only to higher-paying customers 鈥 now available to a much wider audience.

Many companies depend on technology for disruption. To meet new demands, technology can help companies create products at a faster rate. The right technology can also assist in marketing and distributing products and services after they have been created.

Time-saving, cost-cutting technologies are in high demand across virtually every industry. Christensen鈥檚 original definition of a disruptive innovation 鈥 those that satisfy market demand with lower costs 鈥 relies on technology from the start.

There are many organizations that no longer aim to create sustaining innovations. Instead, they search for technologies that help them lower costs, improve manufacturing and apply current products to entirely new market segments.

Disruptive vs. sustaining innovation

Disruptive innovations don鈥檛 overwhelm markets the moment they鈥檙e introduced. On day one, a potential disruption can actually result in worse overall market performance, since it鈥檚 a cheaper version of an existing product. However, with improved reception and adaptation, disruptions can replace sustaining innovations entirely.

To preserve any remaining market share, sustaining innovators are forced to rethink their business model. Companies that sell sustaining innovations might restrict their target market to focus on their most loyal customers only. They might also attempt to make further changes to their products 鈥 in ways that mimic some of the best features of the now-popular disruption.

Sustaining innovators that fail to compete with disruptive innovation may face a quick exit from the market. For example, a popular movie rental corporation with brick-and-mortar storefronts famously was late to adapt to DVDs by mail and, later, streaming. By the time executives realized how much their core market had changed, profits had fallen too steeply to recover.

How to develop a disruptive business model

While the听business model听for disruptive innovation can be successful, creating one can be challenging.

Here are some tips for creating a disruptive model that could potentially help reset your market:

  • Outline your disruptive mindset: Create a firm list of priorities and听听that allows you to lead your organization toward a disruptive innovation.
  • Keep close tabs on your customers: Survey your customers to catalog their habits, likes and dislikes, trends and buying habits.
  • Audit new technologies: Stay on the lookout for modern technologies that can help reduce costs, improve productivity, eliminate manufacturing errors or accelerate time to market.
  • Work proactively: Introduce your new product or service before you鈥檙e competing with another potentially disruptive innovation.
  • Constantly monitor your competition: Watch the other players to match what they鈥檙e doing and anticipate their next moves.
  • Solidify your foundation in business management: Pursue a business degree to improve your skills in fields like business operations, management and leadership.
  • Follow your industry鈥檚 leaders: Keep up with subject matter experts in your industry who are听thought leaders[1]听 and identify emerging trends that might affect the success of your disruption.
  • Leverage data reporting and analytics: Harness听business analytics and intelligence听to inform your business decisions and make the most of both customer and market trends.
  • Evaluate your company鈥檚 positioning:听Conduct a SWOT analysis听to identify your organization鈥檚 strengths, weaknesses, opportunities and threats.

These and other techniques can help your company position itself to create a disruptive innovation and maximize its market value.

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Headshot of Michael Feder

ABOUT THE AUTHOR

A graduate of Johns Hopkins University and its Writing Seminars program and winner of the Stephen A. Dixon Literary Prize, Michael Feder brings an eye for detail and a passion for research to every article he writes. His academic and professional background includes experience in marketing, content development, script writing and SEO. Today, he works as a multimedia specialist at 爱污传媒 where he covers a variety of topics ranging from healthcare to IT.

Headshot of Kathryn Uhles

ABOUT THE REVIEWER

Currently Dean of the College of Business and Information Technology,听Kathryn Uhles has served 爱污传媒 in a variety of roles since 2006. Prior to joining 爱污传媒, Kathryn taught fifth grade to underprivileged youth in 爱污传媒.

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