Managing Innovation: Exploring the Disruptive Innovation Theory

Managing
Innovation

Table of Contents
INTRODUCTION ..........................................................................................................................1
MAIN BODY ..................................................................................................................................1
Description of innovation theory............................................................................................1
Explanation of historical development of meal kit provider of HelloFresh with the help of
disruptive innovation theory ..................................................................................................5
Application of innovation theory for recommending path for future progress of the company 7
CONCLUSION ...............................................................................................................................8
REFRENCES ..................................................................................................................................8

INTRODUCTION
Modern business organisations utilise innovation to stand out from the competition and
secure prominent position in their industry. The concept of innovation is defined as the
procedure of a business firm to create new commodities, processes or ideas or to conceptualize
existent commodities or services in innovative ways. One of the common features of leading
business firms in the current corporate world is the use of innovation to gain success in various
business endeavours. This report focuses on the concept of innovation. The business organisation
selected for this report is HelloFresh. This firm is headquartered in Berlin Germany and was
established in the year 2011. The company operates in the meal kit industry and is has gained
tremendous success soon after formation due to innovative services offered by the company.
This report describes Schumpeter's innovation theory and disruptive innovation theory. These
theories are used to explain historical development meal kit services provided by HelloFresh in
this report. Apart from this recommendation to ensure future progress of the company is
provided in this report on the basis of innovation theories.
MAIN BODY
Description of innovation theory
Theory of disruptive innovation
This innovation theory was developed by Clayton Christensen in the 1990's and is one of
the most impactful business concepts of the current sentry. This innovation theory is helpful for
both small businesses and fresh entrants in corporate world and has been praised by leading
business organisations. This innovation theory has gained more relevance in the current years as
swift growth of industry leaders in various sectors can be explained with the help of this
innovation theory (Biemans, 2018).
According to this theory disruptive innovation is defined as an innovation which
generates new uncontested market with new value network which has the ability to disrupt a
existent industry and damage deep-rooted business firms, partnerships, goods and services. This
theory state that disruptive innovation is the process by which small scale enterprises are able to
utilise innovation to uproot prevailing business firms by entering an industry with usually few
resources and than moving up the market with the help of their innovation. The process of
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disruptive innovation displacing an established company which is known as the incumbent is
completed in certain steps.
Various steps of the disruptive innovation process are provided below:
 Incumbent enterprises build and sell goods or services with the aim of retaining the most
profitable clients of the company and disregard the needs and preferences of consumer
segment which does not provide high profits to the company.
 Innovative business firms which usually have fewer resources compared to incumbent
corporates enter the market and provide commodities which satisfy needs and
preferences of the consumer segment ignored by incumbent business firms at lower
costs. This helps innovative enterprise grow quickly (Chaminade, Lundvall and Haneef,
2018).
 Incumbent business organisations avoid quick growth of innovative enterprise and do not
take any action to eliminate threat of innovative enterprise and focus on profitable
consumer segment despite swift growth of innovative firm.
 Innovative business organisation aim to gain further success in the market by providing
commodities with the aim of targeting current consumer segment of deep-rooted
business firms.
 Innovative disruption begins when the innovative business enterprise is able attract target
consumer base of the well established business organisation on a large scale.
From the above discussion it is determined that disruptive innovation begins with the
innovative company catering to low end consumers while large firms with experience are the
main choice of highly profitable consumer base. The company swiftly move upwards by
developing products for the most demanding consumers and is able to attract profitable
consumers from incumbent business firms swiftly. The moment at which such new business
firms start attracting consumer base of established firms, incumbents focus on adopting
technology or process or product of new business firm in order to sustain their market share.
Incumbent organisations are not able to gain upper hand over business firm at this point of their
growth as the products provided by the new business organisations are regraded as the more
effective compared to products of the incumbent firms (Fuzes, 2020). Incumbents are not able to
gain similar success as the new businesses by adopting their technology, building similar
products or using similar processes because the end commodity offered by new business firms
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