3.1 Literature Review: Defining Disruption
Disruption, as a word, comes from Latin disruptionem (nominative disruption) «a breaking asunder,» from dis-«apart» + rumpere «to break» (Etymonline.com).
When speaking about disruption, most industry experts and academic articles refer to Clayton M. Christensen’s “Innovator’s Dilemma” (1997) which first introduced Disruption theory and the term “disruptive technology” that “covers innovation not only in technology, but also in product, process and service. In subsequent studies, the term disruptive technology has been replaced by disruptive innovation” (cited in Yu and Hang 2011, p.402). Furthermore, finer categorization has been proposed, i.e., disruptive innovation includes both technological and business model types (Markides, 2006).
According to Christensen “a disruptive innovation is an innovation that transforms the complicated, expensive services and products into things that are so simple and affordable that you and I can use them.” (cited in Robles 2015, p. 123).
This definition is an indicator that disruption happens very frequently. It is therefore worthwhile to consider searching more deeply for the causes and explanations of disruptive innovations. “The characteristics of disruptive businesses, at least in their initial stages, can include: lower gross margins, smaller target markets, and simpler products and services that may not appear as attractive as existing solutions when compared against traditional.” (Robles 2015, p. 123).
Disruptive innovation challenged the top-down view of innovation as the first stage introduced by professor Michael Porter and his theory in Competitive Advantage: Creating and Sustaining Superior Performance (1985). According to this theory, companies can achieve a competitive advantage only by innovating one of three “generic” strategies, each of which implements the top-down approach where companies should either differentiate their products and services that merit a premium price or else optimize product efficiencies and sell at a lower price. The third genetic strategy is a variation on the first two strategies focused on one market’s segment offering products and services by low cost or high value — without possibility to mix.
Christensen argues that disruptors often work from the bottom up. In this the second stage of disruption innovation theory, disruptive technologies start their life less valuable and feature-rich than those the current market supports, but at a significantly better price — at least for customers who will accept lower quality.
In the third stage of disruption theory Chan Kim and Renee Maubougne in their book Blue Ocean Strategy (2005) update the bottom-up vision of gradual disruption with a new approach entering unmet needs in existing, mature categories by coming at them more or less sideways. They focus on the range of values proposed by different products and services.
Now disruption or, to be more precise, digital disruption has entered the fourth stage of innovation — the Big Bang Disruption introduced by Larry Downes and Paul Nunes. “The new disrupters attack existing markets not just from the top, bottom, and sides, but from all three at once. By tying their products to the exponential growth and failing costs of new technologies, their offerings can be simultaneously better, cheaper, and more customized — not just for one group of users, but for all customers. This isn’t disruptive innovation. It’s devastating innovation.” (Downes and Nudes 2014, p. 6).
This multidimensionality of disruption is also outlined by Paul Paetz in his book Disruption by Design (2014) where it creates new dimensions of value that the old product category or business model is unable to address by satisfying unmet or underserved needs. These dimensions are a different set of benefits like simplicity, convenience, accessibility, significantly lower price, or ease of use, but can occasionally include breakthrough innovations that have redefined the product category.
According to Paul Paetz (2014) disruptive products generally appeal to new or less demanding users when introduced (they «compete against non-consumption»), but get better over time until they are able to satisfy mainstream consumers, and usually at a lower price than the old class of «better» alternatives.
The multidimensional nature of disruption brings more depth and presents the boundless nature of digital.
In considering different definitions of disruption in reference to technologies or business models, its initial message is as follows:
Digital disruption is a tool, technology, behavior, process or business model that changes customers in terms of developing new behavior and different expectations with new value, while serving them better, more cheaply and faster, and thus changing both the competition and the environment.
