When is a disruptive innovation disruptive?

J PROD INNOV MANAG 2008;25:347–369 r 2008 Product Development & Management Association

When Is a Disruptive Innovation Disruptive?Ã
Glen M. Schmidt and Cheryl T. Druehl

A disruptive innovation (i.e., one that dramatically disrupts the current market) is not necessarily a disruptive innovation (as Clayton Christensen defines this term). To aid in understanding why some innovations are more(or less) disruptive to the long-term health of incumbents, this article offers terminology and a framework complementary to Christensen’s work, focusing on the diffusion pattern of the new product. The framework and model presented herein suggest that when an innovation diffuses from the low end upward toward the high end, a pattern called low-end encroachment, the incumbent may be tempted tooverlook its potential impact. Three possible types of low-end encroachment are illustrated: the fringe-market, detached-market, and immediate scenarios. Conversely, when the pattern is one of high-end encroachment, the impact on the current market is immediate and striking. A three-step framework is identified to assess the potential diffusion pattern and impact of an innovation, thereby helping a firmdetermine the threat or opportunity that an innovation represents.

Introduction

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ew terms in the recent literature on innovation management have been as widely used as the phrase disruptive innovation, as coined by Clayton Christensen in his seminal and path-breaking works, The Innovator’s Dilemma (Christensen, 1997), The Innovators Solution (Christensen and Raynor, 2003), and SeeingWhat’s Next (Christensen, Anthony, and Roth, 2004) (see Graziano, 1998 for a review of Christensen, 1997 and Deck, 2005 for reviews of Christensen and Raynor, 2003 and Christensen et al., 2004). In these works, the essence of a disruptive innovation is described as follows. The new product (the disruptive innovation) is de-rated (it underperforms)

Address correspondence to: Glen M. Schmidt, DavidEccles School of Business, University of Utah, Salt Lake City, UT 84112. Tel.: (801) 585-3160. E-mail: glen.schmidt@business.utah.edu. Ã The contributions of previous coauthors Evan Porteus and Jan Van Mieghem were vital in helping develop this line of work. Journal editors Vish Krishnan, Christoph Loch, and Karl Ulrich provided valuable feedback on related articles as did anonymous reviewers andparticipants at the University of Utah’s annual conference on product and service innovation, including Bill Moore, Kamalini Ramdas, and Bo van der Rhee. The reviews of Professor Anthony Di Benedetto and the anonymous referees led to significant improvements in this article.

with regard to the primary performance dimension most appreciated by mainstream customers of the old product. However,the new product may perform better on an alternate dimension and thus open up a new market (or may simply be easier to use or of lower cost). Then over time the disruptive innovation improves on the primary dimension to the extent that it eventually appeals to the very mainstream customers that initially shunned it. Christensen and Raynor (2003) and Christensen et al. (2004) contend that incumbentfirms often fail to recognize the threat posed by a disruptive innovation. That is, when incumbents are ‘‘overthrown,’’ it is generally by disruptive innovation. Thus, it is critically important that managers be able to recognize a disruptive innovation when they see one. These works go on to suggest that to succeed with a disruptive innovation, an incumbent should pursue it in a separate businessunit. Again, this points to the need for clear recognition—a firm must be able to clearly delineate between what is a disruptive innovation and what Christensen and Raynor (2003) and Christensen et al. (2004) define as its converse: a sustaining innovation.

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J PROD INNOV MANAG 2008;25:347–369

G.M. SCHMIDT AND C.T. DRUEHL

Table 1. Mapping of the Type of Innovation to the Type of...