Disruptive Innovation: In Need of Better Theory*

Abstract

Christensen’s (1997) original theory focused on disruptive technologies. Over time, the same theory has been used to explain all kinds of disruptive innovations. This is a mistake. Different kinds of innovations have different competitive effects and produce different kinds of markets. They should be treated as distinct phenomena. This article summarizes what the academic literature has to say about two specific types of disruptive innovations—namely, business-model innovations and radical (new-to-theworld) product innovations. It argues that even though they share many similarities to what Christensen calls disruptive innovations, they are still different phenomena: they create different kinds of markets, pose radically different challenges for established firms, and have radically different implications for managers. It is only when the topic of disruptive innovation is broken down into these finer categories that progress can be made. In a recent survey of the literature, Danneels (2004) examined the theory behind disruptive technological innovation and identified a number of issues that require further and deeper exploration. One of these issues is the actual definition of disruptive innovation. It appears that despite the widespread use of the term by both managers and academics, there is still a rather unclear understanding of what constitutes disruptive innovation. In its original formulation, Christensen (1997) focused primarily on technological innovation and explored how new technologies came to surpass seemingly superior technologies in a market. Over time, Christensen widened the application of the term to include not only technologies but also products and business models. For example, Christensen and Raynor (2003) list as disruptive innovations such disparate things as discount department stores; lowprice, point-to-point airlines; cheap, mass-market products such as power tools, copiers, and motorcycles; and online businesses such as bookselling, education, brokerage, and travel agents. Although I agree that all of these innovations are disruptive to incumbents, treating them all as one and the same has actually confused matters considerably. A disruptive technological innovation is a fundamentally different phenomenon from a disruptive business-model innovation as well as a disruptive product innovation: These innovations arise in different ways, have different competitive effects, and require different responses from incumbents. Lumping all types of disruptive innovations into one category simply mixes apples with oranges, which has serious implications on how we study disruptive innovations in the future (Henderson and Clark, 1990). To appreciate this point, this article summarizes what the academic literature has to say about two specific types of disruptive innovations—namely, business-model innovations and radical product innovations—and then demonstrates that even though both are disruptive innovations, they nevertheless pose radically different challenges for established firms and have radically different implications for managers.