Key Drivers of Disruptive Innovation in Global Business Environment

This study explores the key drivers of disruptive innovation in the global business environment. It covers the conceptualisation of disruptive innovation, examples of successful disruptive innovation, key trends that drive disruptive innovation, and scholarly perspectives on key drivers of disruptive innovation.

Running head: DISRUPTIVE INNOVATION
Trends in the Global Business Environment
[What are the Key Drivers of Disruptive Innovation?]
Name of the student:
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1DISRUPTIVE INNOVATION
Table of Contents
Introduction......................................................................................................................................2
Conceptualising the disruptive innovation......................................................................................2
Examples of disruptive innovation..................................................................................................3
Key drivers of disruptive innovation...............................................................................................4
Key trends that drives disruptive innovation...............................................................................4
Scholarly perspectives of key drivers of disruptive innovation.......................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................8

2DISRUPTIVE INNOVATION
Introduction
Disruptive innovation can be defined as a process which forms a new market and also the
value network while at the same time; it also disrupts the existing value network and the market.
In course of the action, it uproots the existing and the established business. The term was first
defined at the beginning of 1995 by Clayton M. Christensen and his group of collaborators after
which it was named as an influential business idea (Christensen et al. 2016). This is also
important to note that every innovation may not necessarily be a disruption. The innovation will
be termed as disruption only when the concept was held a success and has brought revolution to
the target industry by weakening the established businesses. There are a few notable examples of
disruptive innovation which created revolution and are still the choices for customers. Few of
such examples include iPads, Google Apps, Skype, Netflix, Tata Nano, Zynga and Pandora
(Vecchiato 2017). It looks like that disruption means an assured success for the technology
introduced as the disruptive innovation. This study is aimed at understanding the key drivers of
disruptive innovation. The aim is served through a constructed study which covers a
conceptualisation of disruptive innovation. The study gives a few examples of successful
disruptive innovation to help readers understand the concept more effectively. It is followed by a
study on the key drivers of disruptive innovation. At the end, the study summarises the entire
study in the conclusion section.
Conceptualising the disruptive innovation
There can be a lot of question on the disruptive innovation whereas there can be different
voices as well answering those all questions. This is indeed difficult to validate the one answer. It
is also very challenging to consider every single answer as the most suitable ones. Interestingly,
the founder of the name disruptive innovation, Clayton Christensen, explains that the term is
widely misunderstood. According to the professor, the term was wrongly labelled with
businesses on few instances. For example, Uber is often considered a disruptive innovation.
However, it is not so as according to Clayton, the ride-hailing app is never termed a disruption in
his book of 1997, The Innovator’s Dilemma (Henderson 2006).
The theory as defined by Clayton states that disruptive innovation happens when smaller
firms come with an idea never experimented before by reputed firms and targets the niche
market. The concept slowly and gradually mounts to success. Bigger companies instead focus on
taking advantages from profitable areas. They keep a safe distance away from being
experimental. Startup business as defined by Clayton struggles at the start; however, it manages
to gain a foothold slowly and gradually. With this, the startup business actually starts tapping a
new market which the bigger payers have failed to realise. The disruption is now in progress and
it actually happens when the customers of reputed firms start preferring the start-up’s services
and products (Henderson 2006).
Christensen (2016) further clarifies that it never means that bigger companies do not use
innovation, those rather. Those firms do it to maintain their service quality and keep their
existing customers satisfied. Bigger companies do also innovate; however, such innovation will
be termed a sustained innovation. Such innovation can be really big and incremental as well from
both the employer’s and the customer’s perspectives. However, loyal customers are specifically

3DISRUPTIVE INNOVATION
targeted with sustained innovation. The main difference between the bigger companies and the
startup companies is a fact that startup firms exploit technologies in thoroughly different ways.
For example, Netflix was unconventional when it moved away from the old system to provide
DVDs on a rental basis to streaming the video on-demand. The quality of service may be inferior
to the existing format; however, once it picks up and the quality is improved as well, this will
certainly become the reason for industry disruption (Henderson 2006).
Examples of disruptive innovation
There are numerous examples of disruptive innovation. Following is the list of few such
examples:
IPads: It is one of the disruptive innovations for many reasons. It has made things easier
for people which were never done before. It is very user-friendly and can be effectively used by
people of every age group. It is disruptive in a way that lot of people now purchase this and use it
like a small portable computer. It has affected the sales of home PCs and laptop (Hutchison and
Colwell 2016). Works as such trading of some stocks, writing a novel, making up important
spreadsheet and usage as for internet is now possible with IPads. There are many tasks which a
large section of customers do on their laptop and PCs such as internet surfing, Facebook
activities, products purchasing, sending e-mails, play games and watch the videos. For those
customers, IPads made their laptops and desktop an obsolete fact (Campbell 2018).
Skype: Skype was developed in 2003 by the Skype technologies which later on acquired
by Microsoft. It was indeed a massive disruption when Skype was introduced. Before the Skype
had entered the market, international calls were lot costlier. Per minute cost of call is now close
to near zero which is evidently the impact of Skype. Now, there are more other apps like
Whatsapp, Imo, Nimbuzz, Messenger, hangouts and lot more which support the video calls
(McClure et al. 2015). However, the real disruption was brought and introduced by Skype only.
Skype had presented an example with the help of a concept that took away a high market shares
from the traditional telecom service providers. It actually provided calls with good audio quality
which was far much better than the traditional calling system. The combination of Skype and
Webcams had both done the disruption in the telecom industry (Bexci and Subramani 2015).
People have now developed the habits to make frequent audio and video calls, a fact which was
seldom seen before the advent of Skype. Interestingly, it is also used to interview applicants by
even being at a longer distance. People can also do chats while they are in the network. They can
continue with chat once they are available. User interface was lot simpler and had provided a
handful experience to users. It has a massive directory where long histories can be stored (Bexci
and Subramani 2015).
Google Apps: This was another disruptive innovation which has collected the variety of
apps at just one platform targeting the people with different age groups. It was beyond the
imagination that accessing to hundreds of different things like e-books, games and lot more
could be that much easier like the way it is now. It is very easy to use and the navigation to
different apps is also very simple (Martínez-Pérez, De La Torre-Díez and López-Coronado
2015). Apps can be easily downloaded to devices such as phones and tablets. It is easy to use as
well. It has actually accumulated many things at just one platform which was an unrealistic fact

4DISRUPTIVE INNOVATION
until the concept had arrived to the market. It costs near to no pricing. It is indeed only about the
data consumption. Google apps do also provide huge storage limits. It can be accessed anytime
by being at any place provided that, the internet is available. It can easily be integrated with
Smartphone without any additional charges for it. It does not pose any limitation on accessing
the platform. It rather gives a feeling of freedom as because limitless things can be done from it.
There are apps to avoid spam messages and enhance the email security. It can also be integrated
with Gmail (Whitehead and Seaton 2016).
Netflix: It was a disruption in the DVD industry. Earlier, people have to purchase DVDs
on rentals to watch their favourite movies. It was also a revolution considering a fact that
watching movies had become easier then. People had no longer required being in theatres to
watch their favourite movies and make huge expenses. They can then do the same by just
bringing DVDs on rental. However, the concept had an issue because customers had to pay a
huge penalty for not returning DVDs within the committed timeframe (Hallinan and Striphas
2016). This was actually a problem. Notably, disruption happens when an existing product or
service has few problem areas. The fact sufficiently creates scope for others to accommodate
(Hallinan and Striphas 2016). Netflix had taken the advantage from and introduced a new
concept that facilitated watching of movies on a request basis. It did not just provide an option to
book the favourite movies but had also enabled services like recommending the specific movies
to the specific users. With Netflix, customers had no worries about paying for late submission of
DVDs. It had actually freed customers from the burden of paying penalties. Netflix has kept on
improving its services with the use of innovative strategies. They have improved their
distribution system, the content programming and advance recommendation engine (Allen, Feils
and Disbrow 2014).
Key drivers of disruptive innovation
Key trends that drives disruptive innovation
There are few trends that drive for the disruptive innovation. Customer demands better
service experience which is also one of the trends which make the difference. In irrespective of
industries, customers are never fully satisfied with what they have and rather keep on demanding
for an improved service. A better service means good quality of products or service at the
competitive pricing (de Waal, van Nierop and Sloot 2017). This is why global firms across the
world try their best to become both cost-effective and high in quality. This is indeed very
challenging and requires a robust business model to have a good control of the supply chain
operation. Aldi is one of the few examples which had steered the retail market in the United
Kingdom and Australia with its cost-effective business model. The business model has helped
Aldi to go the other way than the supermarket giants in both the UK and Australia. Aldi, unlike
its competitors, is able to offer customers the quality products at a much lower price (de Waal,
van Nierop and Sloot 2017).
Demand for a better user interface is another trend which drives the disruptive
innovation. Before the advent of Online Shopping like Amazon, there was no clue of any other
mode of shopping than physical stores. The changing consumer behaviour for shopping
experience and the incrementing usage of internet had actually provided space to online

5DISRUPTIVE INNOVATION
shopping (Thananuraksakul 2018). Shopping was never easier the way it is right now. Customers
can easily compare products in multiple regards such as in terms of price & specifications. The
process is simpler as well. The entire process involved in the online purchase is very simple and
just require a few steps to follow. Online shopping now holds a huge market shares and has also
notably affected the brick & mortar stores. Customers, in particular, Millennials love the concept
and see this as an ultimate option to purchase anything they need like foods, clothes, electronic
gadgets and others (Fang et al. 2016).
Customers purchase products is now much faster than ever before. This has also ignited
the disruptive innovation. Interestingly, customers can have their access with variety of products
in quite a few times. This is due to the unprecedented distribution of products through various
channels like online advertisements, TV advertisements, PR advertising and much more (Al-
Sharif, Qwader and Al-Slehat 2017). The stated fact is itself a reason for companies becoming
desperate for robust channels for reaching to millions of customers. The faster the distribution of
products is the more will be the chances for purchase. For example, some of the mobile phone
brands are sold at much faster speed than others. These are the phones which are made available
to customers on the internet only. Effective promotion strategy creates the much-needed buzz
needed to make the sales to happen (Al-Sharif, Qwader and Al-Slehat 2017).
Scholarly perspectives of key drivers of disruptive innovation
According to Reinhardt and Gurtner (2015), despite the significant amount of research
works and the publications, a consensus of what disruptive innovation is has not yet been
reached. The authors have clearly explained the phenomenon which happens along with an
innovation being sought as a disruptive technology. As per the authors, established firms tend to
continue with sustained innovation because their customers always expect continued quality
products and services. The rising expectation of customers from their selected firms creates a
continued pressure on firms to increasingly rely upon the sustained innovation. The authors have
argued the fact presented by Christensen (2016) and said that disruptive innovation as being
defined by Christensen (2016) is not only a form of disruptive innovation and that innovations
unidentified as disruptive, can never be the disruptive innovation. As opined by Reinhardt and
Gurtner (2015), disruptive innovation performs averagely at the start; however, picks up later.
Disruptive innovation as according to Reinhardt and Gurtner (2015) addresses the low-end
markets.
Boston-Fleischhauer (2015) has gone the other way and has rather focused on stating the
ways to incorporate the disruptive innovation at the organisational level. According to the author,
disruptive innovation can be extremely beneficial for both company's and the employee’s
perspectives. There is just a need for incorporating the relevant skills, tools and the data, so that,
employees are trained on the best process specifically designed by the management to attain the
goal. In this way, employees will have a chance to groom their experience as a quality performer
whereas employers will edge past its competitors due to the disruptive innovation. However,
paths for both employers and employees will be critical and is expected to face a lot of challenge.
At the early stage, disruptive innovation will be relatively weaker than the established innovation
in market. It actually takes time before customers start realising the significance and the benefits
of the disruptive innovation.

6DISRUPTIVE INNOVATION
Carayannis, Sindakis and Walter (2015) have supported the views of Boston-
Fleischhauer (2015) by stating the needs for incorporating the excellence with the organisational
business model innovation (BMI). Carayannis, Sindakis and Walter (2015) have identified that
organisation with the capability to integrate its BMI with marketing strategies has the better
chances for a technological transition. Integration in this context means the exhibiting of skills
needed to be explored at both the operational and the marketing level. A skilled workforce and
an entrepreneurial leadership will only help in both organisational and the market level
operations. To summarise, there is a need for supportive operation and also the effective
marketing capabilities to actually initiate or introduce the disruptive innovation.
As opined by Mohr and Khan (2015), 3D Printing technology will have its disruptive
impacts on the future supply chains. The impact will be observed in seven different areas such
as follows:
Impact of 3D Printing Technology
1. Mass customization 5. Validation of logistics and inventory
2. Resource effectiveness 6. Prototyping and product design
3. Manufacturing decentralization 7. Legal and safety aspects
4. Reduction of complexity
Table 1: Impact of 3D Technology
(Source: Mohr and Khan 2015)
3D printing can even reach to locations which are inaccessible by any other means. Examples
include the flood affected areas. Mohr and Khan (2015) have not just supported the significance
of disruptive innovation but have also highlighted the future prospects for 3D printing.
Manufacturers will not suffer from challenging circumstances and will rather enjoy for an
uninterrupted flow of materials. The authors expect the contemporary managers as accepting the
3D Printing.
According to Kaltenecker, Hess and Huesig (2015), IT sector has always remain
surrounded with disruptive technologies in the form of innovative software and hardware.
Authors have supported their point by citing an evidence in the advancement of cloud
computing. Cloud computing was never thought of as to offer more innovative surprises to its
clients and employers. However, Software as a Service (SaaS) model is the one thing that was
never imagined before. A few years ago, there were no clues on what would be the future
developments in the cloud computing technology. The authors Kaltenecker, Hess and Huesig
(2015) has supported the facts for disruptive technology as presented by Christensen (2016) by
saying that the IT industry will keep on tracing disruptive innovations for a fact of never ending
competition for advanced software and hardware.
Conclusion
In summary, the study has found a few contradicting thoughts over the existence of
disruptive innovation. Some opinions go against the concept presented by Clayton Christensen

7DISRUPTIVE INNOVATION
(2016) who actually initialised the term disruptive innovation at the beginning of 1995. It was
argued by Reinhardt and Gurtner (2015) that disruptive innovation is for smaller business and is
suitable for a niche market. Reinhardt and Gurtner (2015) have further said that despite being so
many publications on disruptive innovation, there is still no consensus to define the disruptive
innovation. Hence, the definitions and the concepts will also vary accordingly. On the other
hand, others have more or less supported the importance of disruptive innovation. Two of the
most highly-rated technologies such as 3D Printing and Cloud Computing with SaaS were
identified in this paper. 3D Printing was found as a disruptive technology in this study for a fact
that it would transform the manufacturing experience. Manufacturers will not worry anymore
about the inflow of materials which was a case initially especially in times of natural disaster like
floods. 3D Printing can reach to such places also. Cloud computing with SaaS was also identified
as a disruptive innovation in this study. Cloud with SaaS was never imagined before. People
actually had no clues of it a few years before. However, it is now established as a potentially
disruptive innovation.

8DISRUPTIVE INNOVATION
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