Disruptive Innovation

Abstract

1. IntroductionThere exist sustaining innovations that improve product performance according to existing criteria. In addition, there exist disruptive innovations that can replace existing products, first improving product performance in a different set of criteria despite lower performance in the original criteria, and subsequently causing improvements according to existing product performance criteria (Christensen, 1997).Christensen and Raynor (2003) assumed two types of customers with regard to disruptive innovation: entirely new nonconsumers in markets outside of existing markets, and overshot customers in existing markets.1 New-market disruptive innovations provide new value to nonconsumers through innovations for new markets that subsequently cause disruptive innovations in existing markets. Low-end disruptive innovations provide products and services that grant value in line with low-end overshot customers, but subsequently target customers from the high end (Christensen & Raynor, 2003). Keywords for disruptive innovation are cost, traditional performance, and ancillary performance change (Utterback & Acee, 2005).2 While new-market disruptive innovations may lag in traditional performance, they acquire new markets with innovations in superior ancillary performance and permeate from new markets to existing markets. On the other hand, low-end disruptive innovations exhibit poor traditional performance; nevertheless, innovations with lower costs enable them to withdraw customers from existing markets. 3 New-market disruptive innovations can also be used to replace products on the low end of existing markets; thus, conceptually, there is continuity between new-market and low-end disruptive innovations (Christensen & Raynor, 2003).Existing companies can respond to a sustaining innovation even when the innovation is radical; however, with disruptive innovation, existing companies often fail to form a response. This is because existing companies are bound by their existing value network in which they have developed a customer base and business relationships (Christensen & Rosenbloom, 1995). As understood through the value network, when a value network cannot respond to nonconsumers that demand new value, new-market disruptive innovations occur; when low-end customers are taken from a primary value network with existing products and services, the result is low-end disruptive innovation (Christensen & Raynor, 2003).Can we then assume that there are only two customer types, nonconsumers and overshot customers, with regard to customers who influence the value of a disruptive innovation?4 In Japan's large-scale casting industry, the full mold casting (FMC) method used by Kimura Chuzosho Co., Ltd. became a disruptive innovation that acquired customers with specific requirements unmet by existing wood pattern-based sand mold casting. These customers were neither nonconsumers nor overshot customers.2. Process Innovation of FMCAs the name implies, a wood pattern is a pattern made from wood. Sand mold casting in the casting industry has extensively used these wood patterns. The wood patterns are filled with molding sand, and a mold is formed by solidifying the molding sand. The space created by the removal of the wood pattern is filled with melted metal, and a casting is formed. At present, medium- and small-scale castings are often made by using patterns of metal or plastic, while molds are often formed with metal. However, even today, large-scale castings are made by using sand mold casting with wood patterns.In contrast, FMC also uses molding sand, though it uses patterns made from foam polystyrene instead of wood patterns. In FMC, the pattern fills the interior of the mold, and subsequently melted metal replaces the pattern inside the mold, thereby forming a casting.The process of wood pattern-based sand mold casting is as follows. 1) A wood pattern is formed (this pattern is a model of the finished product). …