The threat to the legacy: more and more, industries are exposed to new business models, some of them with disruptive potential to leave large competitors out of the market in a few years.
Disruption or disruptive innovation is a process in which a product or service is initially oriented towards the low-end market (low profitable customers) through simple applications, but which relentlessly scales the market to finally unseat competitors established in the main market (profitable or high profitable customers).
Disruptions not only begin being inferior in performance but also in price, compared to the leaders of the market. However, disruptions are capable of breaking trade-off between price and performance, improving the latter and even staying lower price over time than traditional solutions. For breaking this trade-off is necessary to create an operational and / or financial model different from the existing one.
The interest in disruptive business models is growing within circles of executives, politicians, investors and entrepreneurs. At the same time, there is a lot confusion about what really means disruption and often we found very generic references: i.e. when a new technology emerges, a new company bursts into the market with some success, etc.
Apple, Netflix and Uber are recent examples of successful disruptions to the PC, to the extinct entertainment giant Blockbuster and to the black-car service, respectively. In each case, the disruptor makes computing capabilities, entertainment and transportation services simpler, cheaper and more accessible than traditional competitors.
Clayton Christensen is Harvard Business School Professor and main promoter of the strategic framework on disruptive innovation. Forbes magazine places Christensen as one of the most influential business strategists of the last 50 years. Author of the bestseller ‘The Innovator’s Dilemma’, the book is considered as one of the six most important business books ever written, according to The Economist magazine. Steves Jobs was deeply influenced by the Christensenʼs framework on disruptive innovation.
From the point of view of return on investment, disruptions obtain ROIs over 1000% .