Managing Innovation: Disruptive Innovation Theory and its Application in the Historical Development Context of Spotify

Managing Innovation

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Disruptive Innovation Theory.....................................................................................................3
Application of the Disruptive Innovation Theory in the historical development
context........................................................................................................................................7
Application of the Disruptive Innovation Theory in the future development context..............10
CONCLUSION .............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Innovation is the new business, that means creativity brings in new concepts, products for
people and fresh opportunities in the market place. Innovation is the idea of developing
something fresh that can substitute existing goods with higher efficiency or adds new value to
customer satisfaction and need fulfilment by providing a fresh product (Szutowski, Szulczewska-
Remi and Ratajczak, 2019). Innovation management is a systematic procedure that includes
promotion of the new developed ideas in organisation and in external environment for higher
level of recognition and promotion of the idea in the market. The presented report is developed
on Spotify a Swedish audio streaming and media service provider which was founded in 2008
and headquartered in Stockholm, Sweden. The organisation was developed with the purpose of
rendering a unique and best quality platform to user to stream their interest of music, podcasts
and several other audio media. The assessment includes a thorough discussion on the Disruptive
Innovation Theory for understanding its concept and associated benefits as well as limitations to
the firm. Moreover, the theory is applied on historical development and future development
context of Spotify.
MAIN BODY
Disruptive Innovation Theory
Disruptive Innovation Theory is basically a process of bringing the product in market
and establishing its presence. Disruptive innovation is a buzzword that describes the concerns for
existing company's or businesses in market causing due to new entrant. In recent years of
business trend is changing and leading to innovation and creativity which have given birth to
several new start-up's that enters or emerges in market with a primal goal of changing the
respective industry by offering a new and better substitute for existing goods or by addressing an
unattended need of the social groups.
Therefore, Disruptive Innovation Theory revolves around the concept of how businesses
either existing or new entrants can form an alliance for understanding the presented fresh
opportunities and threats for spotting out their potentials and how can they become more and
more value adding to customer needs and goal achievements. The Disruptive Innovation Theory
is defines as a process of initially introducing the product and service in market in lower cost and
offering higher level of accessibility to the potential buyers and general public. Once the product

is established in the market place it moves up gradually by displacing the position of competitors
and similar or substitutive products or service offering rivals.
According to the process of Disruptive Innovation Theory there are four key concepts
which are most commonly used by individuals for effective application of theory in business
organisational context. The process and related steps are as follows:
 In present business environment innovation is trendy and one basic tool which leads
businesses to change and grab presented opportunities. Thus, organisations develop,
innovate and upgrade their products and services in regards to address market demands
and gain portability. The companies ignore the preferences and needs of the downmarket
customers (Ottosson, 2019).
 The new business entrants most commonly start-up's focus on those downmarket social
groups and their needs by making them their target market segment and gain traction by
addressing their needs in lower cost as compared to before and in more effectual
manners.
 The companies already existing and being focused on highly profitable customer base
and audiences ignore the new entrant and do not consider them as a competitor.
 Then the entrant which made use of Disruptive Innovation Theory gradually moves
upward in their respective industry by offering better solutions to other segments and
social groups which includes the high profitable customers as well.
 Once the market is attracted and presence is made the new entrant becomes the disruptor
causing disruption for the Incumbents and becoming their potential competitor for longer
period which leads to change of attitudes and firms core competencies by innovation and
development or maintaining the competitive edge.
In context of the theory the Disruptive Innovation when applied is not a attempt made for
bringing better goods and services in market on the contrary it is placed for disruption and
redefining the mechanical phenomenon of the business and the industry by building offerings
which are of lower value in comparison to the already present in the market and offer them in
lower cost and becomes more and more accessible to the customer that is the lower market
segment (Leminen, Nyström and Westerlund, 2019). The theory also has attached four key
aspects with it that are addressed as relevant tips for the innovation notions. These are elaborated
underneath: