What is disruptive innovation and how to apply it?

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The term disruptive innovation has become a famous jargon in the world of entrepreneurship, used as a synonym for a new or modern venture in the business world. But is that really what disruptive innovation means? Learn a little about this theory!


What is disruptive innovation?



The term disruptive innovation emerged in 1995, created by Clayton Christensen, and designated the process in which a small company created a rupture with a sector already consolidated in the high-level market, appealing to less affluent strata, in sectors not yet explored.



This is because many large companies, the so-called “market owners”, focus exclusively on meeting the demands of large customers, who are able to pay a lot for high-quality services, and who are at the top of the store market. This was the case, for example, with computers in the early 1990s, which were manufactured only as a solution for large companies, which could invest a lot of money in high-end technology.



With the advancement of these “top” solutions, a large part of the market is not served and this is where disruptive innovation comes in as a strategy.



The theory of disruptive innovation predicts that entrepreneurs will pay attention to these gaps in the market, in order to anticipate a demand that does not even exist among consumers. It does not seek to compete in the “high market” with the giants, but to meet the needs of potential consumers who are outside the radar of these giants, often offering a service of slightly lower quality than that produced for top-of-the-line products, at a more affordable price.



This strategy may or may not work, but if it is successful, it can transform the entire landscape of a market. A prime example is Netflix. When Netflix first came out, its video-on-demand service did not pose a real risk to the large video rental franchises. On the contrary, customers who normally rented and bought DVDs would be unlikely to trade their precious habit of visiting video rental stores for online digital files. However, Netflix was gradually able to create a video-on-demand streaming service capable of delivering an ever-growing catalog to users, with quality and convenience, at a low price. The result is already known: the video rental crisis completely changed the way people consume audiovisual media.