Module 4•Unit 3 of 6•13 min

Sustaining vs. Disruptive

One distinction deserves its own unit because it explains why great, well-run companies get toppled by seemingly inferior newcomers. Clayton Christensen's theory of disruptive innovation is among the most important - and most misused - ideas in the field.^[1] The key is the difference between sustaining and disruptive innovation.

Sustaining innovation

Makes a good product better along the dimensions mainstream customers already value. Incumbents usually win here - they are motivated and well-equipped to serve their best customers.

Disruptive innovation

Starts simpler, cheaper, and "worse" on traditional measures - serving overlooked or non-consumers - then improves until it upends the mainstream. Incumbents usually miss it.

The innovator's dilemma

Here is the trap that gives the theory its name. Disruptive products start out worse, cheaper, and lower-margin - so serving them looks irrational to a well-run incumbent. Listening to your best customers, protecting your margins, and investing where returns are proven - all the "right" managerial instincts - push you to ignore the disruption until it is too late. The incumbent does everything right and still loses. That is the dilemma.

How disruption unfolds

1A newcomer targets overlooked or non-consumers with something simpler and cheaper.

2Incumbents dismiss it as inferior and beneath their best customers.

3The newcomer steadily improves, climbing into the mainstream.

4By the time incumbents react, the newcomer has taken the market.

"Disruptive" is wildly overused to mean "new and impressive". In Christensen's precise sense, disruption is a specific trajectory - from the low end or a new market, upward. Uber, for instance, is debated as a true disruptor because it did not start at the low end. Use the term precisely, or it loses all meaning.

You decide

A tiny startup offers a crude, cheap version of what you sell, aimed at customers you don't even want. Your team says 'ignore it'. What's the disruption-aware move?

Discuss with your group

Is there a 'crude, cheap' newcomer in your market that your organisation is dismissing? Track its trajectory - is it climbing toward your mainstream?

Try this at work this week

Identify the cheapest, simplest competitor in your space - the one easiest to dismiss. Plot where it started and where it is now. If the line is climbing toward you, you are watching a disruption in progress.

Sources

Christensen, C., The Innovator's Dilemma, 1997.
Christensen, Raynor & McDonald, "What Is Disruptive Innovation?", HBR, 2015.
Christensen, C. & Raynor, M., The Innovator's Solution, 2003.

Degrees: Incremental to Transformative

The Ten Types of Innovation