1. Introduction
The term ‘disruptive Innovation’ has gained wide popularity since it was
first introduced by Christensen (Christensen, 2003). However, this concept
has also caused debate as to what exactly is meant by ‘disruptive Innovation’,
how it can be applied and to what extent it can be useful to anticipate and
respond to the emergence of disruptive technologies.
Chapter 2 will introduce and critically evaluate the concept of ‘disruptive
innovation’ (Christensen, 2003). Chapter 3 will show how this concept can be
applied to the cases of Skype, Nintendo and Linux. Chapter 4 will attempt to
derive conclusions from the literature review on disruptive innovation and its
application to the selected cases.
2. ‘Disruptive Innovation’ - a useful theoretical concept?
Christensen first introduced the concept of ‘disruptive technology’ in 1995
(Christensen & Bower, 1995). In his studies of hard-disk drives, he observed
that many companies operating in the mainstream market had failed in
retaining their market power or gone into bankruptcy. This was due to the
emergence of other companies which offered products which were typically
simpler, cheaper, lower in performance and more convenient to use and were
appealing to customers in a niche market.
1
Established products became ever more complex and sophisticated over time
and exceeded the ability of customers to adopt these products, while
‘disruptive technologies’ offered other features, e.g. low price, simplicity.
‘Disruptive technologies’ occurred at the low-end of the market and was
initially not perceived as a threat by established firms (Christensen & Bower,
1995). Ultimately, the ‘disruptive technology’ improved in performance,
expanded into a mass market and eventually replaced established
technologies.
Christensen distinguishes between ‘sustaining technologies’ which improve
the performance of already established products in the mainstream market
and ‘disruptive technologies’ which have attributes which customers in other
segments of the market value (Christensen & Bower, 1995).
Research emphasises that the reasons why companies invest in established
markets rather than in potentially ‘disruptive technologies’ lies in the
technological trajectories of companies, meaning companies do not have an
unlimited choice of strategies available. A company’s opportunities are path dependent, e.g. constrained by its position, knowledge and competencies
accumulated over time (Nelson & Winter, 1982 & Dosi, 1982). This makes
responding to ‘disruptive technologies’ very difficult for established firms.
2
The difficulty in defining what precisely a ’disruptive technology’ is relates to
the question if technologies are in themselves inherently disruptive.
‘Disruptive technologies’ can be a threat to some companies while
opportunities for others, in other words they are either competence destroying or competence - enhancing (Tushman & Anderson, 1986). An
example would be the internet, which may be a disruptive technology to some
firms, while an opportunity to others, e.g. amazon in bookselling (Daneels,
2004). However, Christensen emphasised that competence - destroying
technologies serving a mainstream market do not constitute ‘disruptive
technologies’ (Christensen & Bower, 1996).
This points to the possibility that it is not technologies themselves which
cause the disruption to established companies but rather the impact of these
technologies on firm’s internal processes, their accumulated knowledge base and competences. Therefore, Christensen eventually extended the term
‘disruptive technologies’ to ‘disruptive innovation’ to extend its potential
applicability (Christensen, 2003).
Nevertheless, the difficulty still remains to accurately define different types of
innovation. For instance, Henderson & Clark classified innovation according to
the knowledge required to develop new products which includes two
dimensions: knowledge of components and knowledge of the linkages
between components (Henderson & Clark, 1990). This includes incremental,
modular, discontinous and architectural innovation (Henderson & Clark,
1990).
3
However, it has been pointed out that researchers classified the same
innovation differently depending on their definitions (Garcia & Calantone,
2001) e.g. the electrical typewriter could be classified as ‘discontinous’ due to
causing industrial disruption (Utterback, 1996) or as ‘incremental’ as it
concerns adding new features for improving an already existing product
(Rothwell & Gardiner, 1988). In addition, the term ‘radical innovation’ is often
used interchangeably with ‘disruptive innovation’. However, while disruptive
innovation refers to products which are specified as being initially cheaper,
simpler and lower performing than rival products and aimed specifically at a
niche market, ‘radical innovation’ seems to be broader defined and refers to a
substantially different technology while offering a distinct increase in customer
benefits (Chandy & Tellis, 1998).
While the terminology for disruptive innovation seems to be confusing, it
becomes even more complicated if the term ‘disruptive innovation’ also refers
to technologies, products and business model innovations.
For instance, Hamel emphasises the need for ‘business concept innovations’
by reconfiguring existing business models to enable a company to stay ahead
of its competitors in a fast changing environment (Hamel, 2000).
The problem arises when ‘disruptive innovation’ refers to technologies,
products and business models alike as conclusions about one aspect of a
specific type of ‘disruptive innovation’ cannot be generalised across all types.
For instance, while Christensen shows that disruptive innovations eventually
dominate the market, this is not true of business model innovations, e.g. low
budget - airlines have captured approx. 20% of the entire market (Markides,
2006). This distinction has important implications as it affects the strategies
established companies may want to adopt in the light of emerging, disruptive
innovations elsewhere. Therefore, imitating a competitor’s product or business
model may not necessarily be adequate as it may lead to an erosion of the
existing customer base (Markides, 2006).
4
It is also difficult to apply the concept of ‘disruptive innovation’ across different
product categories. Utterback shows that some products do not fit into this
concept as some displayed in their initial stages higher performance and / or
higher price than their rival product (Utterback, 2005). This may be due to the
complexity of most products which usually have more performance features in
comparison to the disk drives Christensen studied (Utterback, 2005). There is
therefore the possibility that customers simply trade different features for
others when deciding to purchase a new product (Daneels, 2004).
The distinction between sustaining and disruptive innovation as proposed by
Christensen is based on the innovation, product and technology lifecycle
concepts.
According to the innovation lifecycle model, the innovation process starts with
an exploration phase of technological possibilities and market needs which
are initially unknown. Over time, a dominant design emerges in the
‘transitional phase’ and the choice of options becomes focused along
technological trajectories. This is followed by refining the product to improve
product performance in the ‘specific phase’ (Abernathy & Utterback, 1978).
The Product Lifecycle Concept (PLC) states that products follow a pattern of
market development where a product is first introduced to the market,
followed by market growth when demand begins to accelerate, the stage of
market maturity where demand grows at the replacement rate and finally, the
product enters the market decline stage where consumers lost interest and
sales start to decline. The product lifecycle can be seen as an S-shaped curve
(Levitt, 1965).
The technology life cycle follows a similar pattern as the PLC starting with an
introduction stage, where there is initially slow progress in performance due to
the technology not being well known, followed by a growth phase, where the
technology rapidly improves in performance around a dominant design. The
5
new technology becomes widely known and sales increase rapidly. The
technology then enters a maturity phase, where progress slows down
significantly (Foster, 1986 & Utterback 1994).
However, it has been demonstrated that the development of technologies
follows an irregular pattern with longer phases of no growth interrupted by
performance jumps (Sood & Tellis, 2005). Further, new technologies may
emerge above or below the performance of existing technologies and
originate in established as well as in entrant firms (Sood & Tellis, 2005).
The limited validity of the product lifecycle has been emphasised and
research points to the fact that this model cannot be generalised across
industries, products and services e.g. many brands remain in a leading
market position 2 - 3 decades after their introduction (Mercer, 1993).
It also remains unclear when a product enters a certain stage in the lifecycle
as some products diffuse very slowly while others display rapid growth (Dhalla
& Yuspeh, 1976). The length of the different stages varies between products
and some products experience a sudden revival and proceed to a period of
renewed growth (Dhalla & Yuspeh, 1976). In fact, the time when a product
enters a specific stage of the PLC and its length depends on a variety of
factors, e.g. in the initial stage this may be the perceived comparative
advantage of the new product relative to the alternative, barriers to adoption
or information and availability (Day, 1981). It has also been shown that the
PLC model actually works in reverse order for services where innovation in
processes comes first which create the necessary conditions for product
innovation to occur (Barras, 1986).
6
Based on these observations, it is questionable if the concept of ‘disruptive
innovation’ is useful as some ‘disruptive’ innovations do not necessarily
replace older products.
In addition, Varadarajan shows that incremental innovation plays a vital role
as part of a competitive strategy by extending the timeframe of radical
innovations (Varadarajan, 2009). This can take place by entering new markets
in product categories where the firm is present, e.g. entering new markets,
market segments or new geographic markets (Varadarajan, 2009). Equally, a
firm may enter markets where it does not have a presence yet, e.g. entering
new markets which are currently fragmented or emerging markets
(Varadarajan, 2009). It may also succeed in achieving or defending product
leadership, e.g. responding to price sensitivity (Varadarajan, 2009). Kanter
emphasises that established firms make the mistake on focusing on the next
blockbuster innovation, being too product centric and expecting immediate
profits, while ignoring that incremental innovations can lead to substantial
profits (Kanter, 2006).
However, products in the category of ‘disruptive innovation’ do not
automatically generate profit, but it rather depends on the ability of the
innovator to commercialise the product successfully. Teece shows that where
products can be protected through patents or copyright or the nature of the
product is such that it would be difficult for competitors to imitate, the
innovator is likely to profit from the innovation (Teece, 1986). Therefore,
barriers to entry play an important part in determining success of new entrants
(Karakaya & Stahl, 1989). For instance, a way for established firms to
maintain barriers to entry and remain leader in the market may be through
proprietary software systems, e.g. Microsoft has a market lead due to the
windows platform as a proprietary system.
7
Christensen also seems to overlook potentially disruptive technologies which
did not succeed in the market (Daneels, 2004). Established companies also
have survived to ignore the emergence of disruptive technologies without it
having serious consequences for their business, e.g. Sony initially failed to
develop a portable MP3 player despite its dominance in the market for the
walkman (Kageyama, 2005). Equally, established companies have managed
to successfully respond to disruptive innovations either through internal
reorganisation or establishing other organisational entities, e.g. Motorola, IBM
or Kodak (Macher & Richman, 2004).
Established companies usually have expertise in certain areas due to their
firm - specific capacities and knowledge - base which, due to its often tacit
nature, is difficult for competitors to imitate which may remain a distinct
advantage for established companies.
King and Tucci show that companies with prior experience in hard disk drives
were most likely to enter new market niches and contradict Christensen’s
findings (King & Tucci, 1999, 2002), while Chesbrough comes to similar
conclusions (Chesbrough, 2003). In addition, research also showed that
established firms originating in other industries are diversifying and bring their
resources and transferable knowledge when entering a new market (Helfat &
Lieberman, 2002). It has also been shown that prior knowledge facilitates the
learning of new knowledge, meaning potential indicators for a disruptive
innovation may be better recognised and processed by an established firm
with accumulated knowledge in a specific field. This absorptive capacity is a
necessary prerequisite for firms to make sense of new knowledge (Cohen &
Levinthal, 1990).
8
Companies which are producing disruptive technologies, products or business
models will compete with the tangible and intangible resources an established
company has available as soon as it enters the mass market, e.g. established
firms often dominate supply chains, retail channels and other distribution
networks or have other complementary assets or capabilities such as
marketing or after-sales support (Teece, 1986).
In this case, established firms maintain their market position through joint
ventures, strategic alliances or acquisitions of start-ups which provide access
to the disruptive technology for established firms while at the same time
providing market entrants with the vital resources (Rothaermel, 2001).
Therefore, it seems that some established companies may fail when faced
with the emergence of disruptive innovations, products or business models,
but certainly not all of them do. A recent study of breakthrough innovations in
the pharmaceutical industry has shown that radical innovation is more likely to
originate in established firms. These have greater financial, technological and
market - related resources to manage the risk inherent in radical innovation
(Sorescu et al., 2003). However, the pharmaceutical industry maintains high
barriers to entry for new entrants due to the high degree of concentration,
products are protected by patents and innovation involves a substantial
amount of risk and requires large financial and technological resources.
Therefore, these results cannot be generalised to apply to other industries.
A further study of radical innovations in the consumer durables and office
products pointed to the weak empirical base of the disruptive innovation
literature and emphasise that these have not used cross - sectional studies
with a large sample of products. The study reveals that older innovations were
indeed mainly introduced by new entrants, while recent innovations originated
in established firms (Chandy & Tellis, 2000).
9
It seems that the evidence is rather inconclusive as to under which conditions
firms failed when faced with disruptive innovation. Possible explanations
range from the case of Polaroid and the unwillingness of senior management
to embrace a potentially disruptive technology (Tripsas & Gavetti, 2000) to the
role of routines and organisational inertia (Nelson & Winter, 1982).Therefore,
Daneels points to the need to look at entire systems into which a firm is
embedded as factors for explaining why some firms fail when faced with
disruptive innovation (Daneels, 2004).
2. Case studies
After reviewing the relevant literature and pointing to the limitations of
‘disruptive innovation’, this chapter will attempt to apply this concept to recent
technological innovations. Rather than focusing on one particular innovation
or organisation, this chapter compares three different innovations in order to
derive useful conclusions regarding the validity of ‘disruptive innovation’. The
cases of Skype, Nintendo Wii and Linux were selected on the basis that they
are recent innovations in a product category different from those studied in the
literature which makes them an interesting subject for enquiry.
2.1 Skype
Skype has combined two potentially disruptive technologies, P2P (peer - to peer computing) and VoIP (Voice over Internet protocol) into a new business
model and therefore radically transforming the way people communicate (Rao
et al, 2004). It also added other features such as instant messaging and
provides an easy - to use interface.
10
Skype can be downloaded for free and is compatible with all major operating
systems. In addition, Skype is easy to install and does not require a
configuration of gateways and firewalls (Tapio, 2005).
Skype was founded in 1993 and initially offered lower performance in contrast
to communication via landlines or mobiles, is free and easy to use and aimed
at a marginal segment of the market (Tapio, 2005). Skype - Out/In was added
later as a feature to make / receive calls to other networks or landlines as a
charged service (Rao et al. , 2004).
Skype changed the traditional marketing and revenue - based business model
in the telecommunications sector by relying on a peer - to - peer based
platform, free PC - to - PC telephony, its potential for scalability as well as
viral marketing (Osterwalder at al., 2005). Delivery and sales channels differ
substantially from conventional network providers as Skype operates entirely
over the internet (Osterwalder at al., 2005).
It therefore fits into the concept of ‘disruptive innovation’ as proposed by
Christensen (Christensen, 2003). Faced with the disruptive innovation with the
emergence of Skype, existing network providers in the telecommunications
sector may find it difficult to compete against Skype as their business model is
entirely based on revenue generating processes through per - call charges
(Osterwalder at al., 2005). Skype equally derives revenues from SkypeIn/Out
as well as other available premium features. However, its business model is
based on building up a large customer base followed by the introduction of
further premium services, while basic services such as Skype - to Skype calls
remain free of charge (Osterwalder at al., 2005).
11
While at first glance, Skype seems a perfect example of a ‘disruptive
innovation’, the next step according to the concept of ‘disruptive innovation’
would be to replace older technologies, e.g. the revenue - based business
models as per - call charges of the conventional mobile & landline operators
would become obsolete over time and Skype would need to shift into the
mass market.
As Skype was acquired by eBay, there might be possibilities to reach a mass
market (Rao et al. 2004). eBay’s acquisition of Skype could lead to a potential
disruption as for eBay, the partnership has the advantage of adding a free
communications feature to online auctions and thereby accelerate trade, while
PayPal, owned by eBay, can provide simple and secure billing for corporate
customers of Skype (Rao et al 2004).
Another recent partnership with the 3 network may turn out to be another
route to the mass market. The Skypephone in partnership with 3 was released
in August 2008 and offers free PC - to mobile as well as free mobile - to mobile calls (New Media Age, 2008). Network operator 3 tries to position itself
in the market as a mobile media company by adding applications such as
Skype, Facebook and Windows Live Messenger (New Media Age, 2008).
Skype in turn could potentially reach a mass market in the conventional
telecommunications sector by entering into partnerships with network
operators (Rao et al 2004).
12
Skype’s business model and peer - to - peer technology could challenge
established players in the telecommunications sector. A major erosion of
revenues was expected in particularly in the business sector and affecting
mainly long - distance calls (Evalueserve, 2005).
In addition, mobile and landline operators have the disadvantage that they are
location specific, meaning customers travelling abroad rely on roaming
agreements with local operators (Tapio, 2005).
However, rather than replacing the business model of conventional mobile
and landline operators, it may just be the case that Skype exists alongside
operators such as O2 or Vodafone as using Skype for SkypeOut calls may not
always be the cheaper option, particularly for local calls (Tapio, 2005).
It can be concluded, that while Skype fits into the concept of ‘disruptive
innovation’, there are doubts as to whether Skype will be able to reach a mass
market in the near future. Equally, it is not clear if peer - to - peer technology
will actually lead to a substantial decline of revenues for conventional
operators.
As Skype relies on extensive partnerships in order to succeed, it seems that
even though Skype’s technology and business model have disruptive
potential, conventional operators still dominate the mass market for
telecommunications. Therefore, it is only through co-operating with other
internet - based businesses or conventional operators that Skype will
succeed.
13
This conclusion confirms the earlier review of the literature that large,
established companies have important distribution and sales channels as well
as a large customer base at their disposal, which means high barriers to entry
for new firms. Skype has so far struggled in particular to attract corporate
customers (Rao et al 2004).
It also confirms that the commercialisation of a disruptive innovation is unlikely
to be performed by a small start - up firm without support and co-operation of
the established players.
2 .2 Nintendo
Nintendo, a Japanese developer of interactive entertainment software and
console manufacturer, is an established player in the electronic games
industry since 1977. Recently, Nintendo enjoyed phenomenal growth in sales
(Datamonitor, 2008). The success of the Ninntendo Wii, launched in 2007,
and its related software is due to adopting the “Blue Ocean” strategy, meaning
Nintendo is no trying to compete with Sony or Microsoft in sophisticated
technical features and graphic capabilities, but is mainly aiming at the casual
gaming sector, in particular female and adult gamers and people who would
normally not play games (Blakely, 2007). Nintendo has also introduced the
Wii motion controller which responds to motions in a 3-D space, and aims at
making games intuitive and accessible through motion control (Nintendo,
2008).
14
Therefore, the Nintendo Wii and its software & accessories are products
which could be characterised as a disruptive innovation: The Wii console is
cheaper, simpler and lower in performance than their Playstation & Xbox
counterparts and is aimed at what other firms had previously regarded as the
margins of the market. However, if Nintendo can be classified as an entrant
firm is debatable as it has been operating in the gaming industry since 1977.
This has implications for the theory of ‘disruptive innovation’ where the
disruption typically originates in entrant firms or start - ups.
Both
Microsoft
&
Sony are
investing
considerably into
developing
technologically advanced hardware. The production prize for the hardware is
not reflected in the purchasing prize and both console manufacturer’s
business model is based on pushing revenues from selling games to make up
for the losses in hardware sales (Niccolai, 2006). By developing an expensive
product with sophisticated technologies, e.g. Sony offers a PS3 with Blu - ray
as well as considerable memory capacity, the established console
manufacturers offer a product which exceeds market adoption capacity. This
would also fit into the concept of ‘disruptive innovation’.
While Nintendo’s popularity is growing and quickly turning into a console for
the masses through its emphasis on a social gaming experience, Sony in
particular is catching up fast. In 2008, Sony has released titles such as “Buzz”
or “LitteBigPlanet”, and “SingStar” still enjoys high popularity. The recent
release of the virtual environment “Home” adds a social space where users
can meet online, chat and play games. Faced with Nintendo’s success, Sony
is now trying to establish itself in casual, family - friendly gaming, while on the
other hand still maintaining its hardcore gaming business (Yin - Poole, 2008)
15
Christensen recommends that Sony should “[…] think about how they can
disrupt the disruptor and find a new way to redefine the space” (Christensen,
2007) rather than imitating the competitor’s products.
While Nintendo Wii can be classified as a ‘disruptive innovation’ which has
already penetrated the mass market, it is questionable as to whether Sony &
Microsoft as established firms in the market will eventually cease to make
profit. It seems that the Wii console will more likely coexist with the Playstation
and Xbox as Nintendo offers a substantially different product range in contrast
to Sony & Microsoft (Gamasutra, 2007).
Another point to consider is that technological development, particularly in the
games industry is moving at a very rapid pace and eventually, a demand for
higher performing technologies may emerge, once casual gamers are
introduced to gaming. This means that Nintendo would have to compete in
the foreseeable future with large firms with years of accumulated knowledge
and technological capabilities.
2.3 Linux
Linux is an operating system based on the Free and Open Source Software
(FOSS) development and is therefore free and its source code is accessible
and can be modified and distributed under the GNU General Public license
(Molinie at al., 2005). As any other open source software such as MySQL or
Apache, Linux is developed by individual programmers who collaborate on a
voluntary basis in a decentralised network (Molinie at al., 2005).
16
The Linux operating system therefore fits into Christensen’s model of
‘disruptive innovation’ as it has been developed as a free software aimed at a
niche market and initially fulfilled the characteristics of lower performing,
cheaper, though not necessarily simpler to use in comparison with its rival
products.
It has been shown that the impact of Linux on established firms in the
software market has been mixed: while it has forced some competitor’s
product out of the market or rethink their strategies e.g. the Apache project’s
impact on IBM, it has not been successful so far in the mass market, e.g.
desktop operating systems (Brydon & Vining, 2008). Linux has found
widespread use as an operating system mainly in a corporate or government
environment, but has not yet entered the mass market, even though software
for the desktop market which compares well with Microsoft Windows in terms
of technical performance and user - friendliness has been developed (Molinie
et al, 2005).
One important aspect of Linux is that it is a knowledge creating network of
customers and suppliers who continuously exchange knowledge and value
(Ballantyne, 2002). This network enables innovation and the creation of ideas
and solutions through collaboration and a deliberate knowledge spill-over
effect in an open network (Ballantyne, 2002). Many companies have installed
Linux as it supports innovation processes (Brydon & Vining, 2006). Other
firms such as IBM or Sun Microsystems actively participate in open source
software development as it facilitates the selling of complementary products
and services (Brydon & Vining, 2006).
17
The Linux operating system also enables agility and flexibility rather than
being “locked-in” to one particular system where the customer is
unable to switch to a different product or service (Hicks & Pachamanova,
2007).
Despite the advantages of open source software, in particular Microsoft
remains a dominant player in the software market due to the high switching
costs firms would face if they migrated to Linux, e.g. the need for retraining
and data stored in proprietary data models (Brydon & Vining, 2006).
Further problems arise when required software components are not
developed by the open source community and there is also no guarantee that
existing hardware or software will be compatible with future versions of the
operating system Linux (Bitzer & Schröder, 2007).
While Microsoft has responded to the open source software development
initially with hostility, it now actively participates in open source development.
Sami Ramji, Senior Director of Platform Strategy, has emphasised the
commitment towards driving Microsoft’s Linux and open source strategy and
working with the open source community at the Apache conference in 2008
(Ramji, 2008). This was also shown with the acquisition of the search engine
Powerset Inc. in 2008, where source code as part of the product is
redistributed into the Apache’s Software Foundation Hadoop’s project
(Montalbano, 2008). In addition, Microsoft started to contribute code to a
patch to ADOdb, a data access layer for PHP, which is also open source
(Montalbano, 2008).
18
It can be concluded that while Linux has not yet reached a mass market
penetration, there are signs that it has certainly disruptive potential.
Microsoft started to take open source more seriously and seems to follow a
dual strategy of both maintaining its position in the market through proprietary
software and at the same time participating in the open source network.
At this point, it is difficult to predict if Linux will eventually replace Windows as
an operating system, but if Microsoft starts to invest significant resources into
open source, the competitive advantage of Linux may eventually decline.
While Linux can be classified as a disruptive innovation, incremental
innovation through collaboration in an open, decentralised network is the
essence of any open source software. This once again relates to the literature
discussed earlier, that for some products, incremental innovation will remain
vital throughout their lifecycle.
3. Conclusion
From the literature review of ‘disruptive innovation’ and its application
to the selected case studies, the concept of ‘disruptive innovation’ is certainly
appealing, but has limited practical value as it cannot be generalised across
industries, technologies, products and business models.
Christensen criticises that a one - size fits all approach, e.g. developing
products which are a continuation of an existing product line, will not lead
companies to succeed in the market. While he emphasises the importance of
‘disruptive innovation’, he fails to show how innovation processes differ across
industries and product ranges and essentially prescribes ‘disruptive
innovation’ as standard (Christensen, 2003).
19
Furthermore, it is largely based on theoretical assumptions which can be
regarded as problematic, e.g. the validity of the product lifecycle.
In addition, while ‘disruptive innovation’ focuses entirely on new product
development, it underestimates the vital importance of incremental innovation.
While disruptive innovation may be applicable to some products, technologies
and services, reality in most cases is far more complex. It has been
demonstrated that adoption of products, technologies and services depend on
a variety of interrelated factors. Equally, innovation does not occur in a
vacuum, but usually in a complex network of customers and suppliers
embedded in national systems of innovation (Freeman, 2002).
The case studies have also shown that due to the complexity of product
development, it is difficult to make ex - ante predictions of successful,
disruptive innovations. Even if they do occur, it seems difficult to attribute its
commercialisation to a single factor. The ‘disruptive innovation’ literature fails
to take into account that business innovation is systemic in nature (Sawhney
et al., 2006).
Christensen argues that the uncertain process of ‘disruptive innovation’ can
be managed by focusing almost entirely on assessing existing market
demand
through
effective
market
segmentation
(Christensen,
2003).
However, it has been shown that traditional market research techniques may
be of limited value to address emerging markets (Hassan, 2008).
It has also been demonstrated that disruptive innovation can originate as
much in established as in entrant firms and that often, entrant firms rely on cooperation with resources of large, established firms to enter the mass market
and successfully commercialise an innovation.
Therefore, future research would need to address how firms can balance a
portfolio of different types of innovation and analyse the complex environment
20
firms operate in as well as taking into account that the resulting conclusions
are case and context specific.
21
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