• Disruptive innovation

  • Sources:

    Disruptive innovation inherently changes how businesses and industries operate, often creating new markets and value networks. Here's a synthesis of insights from various experts:

    1. Types of Disruption:

      • Low-end Disruption: Offers a lower-cost alternative to existing products.
      • New Market Disruption: Enables new ways to do things previously impossible. For instance, cryptocurrency and micro-payments fall into this category, offering capabilities like machine-to-machine transactions, contrasting with obscured credit card fees 1.
    2. Characteristics and Challenges:

    3. Misconceptions and Economic Impact:

      • There's a debate on the significance and frequency of disruptive innovation. Some argue that true disruption is infrequent and that the economy remains largely dominated by incumbent firms, as seen in tech giants' continued dominance 4.
    4. Investment Perspective:

      • Disruptive innovation may be underpriced in public markets due to passive investment strategies and focus on pre-IPO spaces. These innovations require a long-term investment view to realize their value 5.
    5. Sector-Specific Impacts:

      • In sectors like blockchain and AI, disruptive innovations can fundamentally misalign with incumbents' business models. While AI is seen as sustaining for big players like Google and Amazon, blockchain represents a more profound disruptive challenge due to its different economic model 6

    Understanding and leveraging disruptive innovation requires both recognizing its potential early and employing strategies to protect and nurture these innovations against the inertia of established business models.

    RELATED QUESTIONS