Theories of Disruptive Innovation

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Disruption Theory and Value Innovation
2a1, DB 8004-01 Spring 2013

Houston, TX

Instructor: Dr. J
Outline
I. Introduction
II. Innovation Theories
a. Disruptive Innovation – Sustaining, Evolutionary and Revolutionary b. Value Innovation– Red and Blue Oceans
c. Compare and Contrast Theories
III. Case Study
d. Apple Inc.
i. Disruptive Innovation
ii. Value Innovation
IV. Conclusion

Introduction
Disruptive innovation has a proven advantage to foster creativity through innovation and the ability to cultivate a sustainable and competitive advantage over the competition when properly strategized. An important factor in determining long-term success is not just reacting to economic trends, but rather a willingness to persevere and sustain the company’s focus. Through the development of a plan that focuses on creating value for the customers needs, managing risks, and operating more efficiently (Harris, 2008), management teams are tasked with an achievable baseline to develop a competitive advantage. The strategic thinking associated with a disruption theory may typically regresses towards what the competition is currently doing and what seems to be the most effective use of that strategy. The blunder of using the competition as a benchmark is that it usually yields short-term or unsustainable success due to a poor strategic reference. The halting of a sustainable competitive advantage depletes the success rate of a tactical counter-move and the birth of new innovation. Through shared innovation outside of a conventional context, the disruption theory has paved the way for many forms of strategic thinking, such as value innovation, which has garnered a much wider range of fluidity. Value innovation places an equal emphasis on value and differs from a technological innovation. This innovation expands through acknowledging the desires of the relative market and capitalizing that knowledge with a sense of economical value and defining the quintessence strategy. Rather than focusing on simply beating the competition, the strategic mindset should be on expanding existing markets or creating new ideas such as those seen in the Blue Ocean strategy, which has been duly illustrated by Apple Inc.

Disruptive Innovation – Sustaining, Evolutionary and Revolutionary The theory of disruptive innovation, sometimes referenced as disruption technology aims to improve a product or service in ways that the market does not expect. This innovation assists in identifying the creation of a new market or a value-added possiblility in an existing market. This market will then create an opportunity through disruption which will aim to displace an earlier technological advancement. Disruptive strategic innovations grow to capture a large share of the established market. Over time, they improve to the extent that they are able to deliver performance that is good enough in the old attributes that established competitors emphasize and enhance in the new attributes. Inevitably, the new innovators growth attracts the attention of already well-established players. As more customers, (both existing and new) embrace the newly arrived strategic innovation, the new business receives increasing attention from the media and those established players as well. Soon, established companies cannot afford to ignore the new way of doing business anymore and will begin to consider ways to respond (Charitou & Markides, 2003). This disruption is generally accomplished thorough identifying a different set of consumers in the new market and then offering the product or service at a lower price than what is currently being offered to provide an implied value to the consumer. The disruption theory was articulated by Clayton M. Chistensen to describe how large, successful incumbant organizations of all types had become toppled by much smaller startups (Raynor, 2011). It is quite possible for...
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