Disruptive innovation

Clayton M. Christensen · 1997

Also known as The innovator’s dilemma

The competitor that displaces you usually starts by serving customers you were glad to lose.

Its place in the frameworkMarket Core›Competitors

What it does

A new entrant arrives with something cheaper and worse, takes the least profitable end of the market, and improves faster than the incumbents expect. The dilemma is that the incumbent’s response is rational at every step: serving its best customers and protecting its margins is exactly what good management says to do, right up until the entrant is good enough for everyone.

Reach for it when: When competitor analysis contains only firms of your own size, and when something cheap and unimpressive has appeared at the bottom of your market.
Where it stops: The term is used for any successful new company, which is not what it means, and the original case studies have been challenged. Most new entrants are simply competitors; disruption in the strict sense is rarer than the word suggests.

Joseph L. Bower & Clayton M. Christensen, “Disruptive Technologies: Catching the Wave”, Harvard Business Review, 1995; Christensen, The Innovator’s Dilemma, HBS Press, 1997.

Why it sits at Competitors

Who else serves the same demand, what they can actually do, and where they are heading — read from evidence rather than from reputation.

A model is only useful when you reach for it at the right moment. This one answers a question that arises here — so it is filed here, and nowhere else. These are the working areas it serves:

The competitor setLevitt on competition defined by the need served, and the substitution threat in Porter’s five forces.
Capability comparisonThe resource-based view applied competitively: comparing capability rather than output.
Reading their strategyPorter’s four-component competitor analysis: future goals, assumptions, current strategy and capabilities.
MonitoringCompetitive-intelligence practice on indicator selection and the cost of undirected monitoring.

All of Competitors

What it touches elsewhere

Nothing in a business is decided on its own. A conclusion reached with this model at Competitors lands in these other cores, whether or not anyone follows it there.

Brand CorePositioning is argued against this set, and against the frame the customer actually uses.
Business CoreCapability comparison is only interpretable against a clear reading of your own competences.
Market OpportunitiesWhy nobody is serving an apparent opportunity is usually answered here.
Data CoreMonitoring is a measurement programme and decays without an owner.

Filed at the same place

These answer questions that arise at Competitors too. Where they disagree with this one, the disagreement is the useful part.

The five forcesProfitability in an industry is set by five pressures, and rivals are only one of them.
Strategic group mappingCompetitors cluster into groups following similar strategies, and the real rivalry happens inside a group.
Blue Ocean StrategyStop competing on the factors an industry already competes on, and change which factors are on the table at all.

Elsewhere in Market Core

These are other people’s models, named here so you can go to the source and use them properly. The Omnigoal is not affiliated with their authors and is not endorsed by them; nothing of theirs is reproduced here — no canvas, no diagram, no wording. Each is described in our own words, with the originator credited, because the framework is a place to put thinking, not a replacement for the people who did it. Model names and trademarks belong to their respective owners and are used here only to refer to the work itself.

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