Managing Innovation: Disruptive Innovation Theory

Managing Innovation

Table of Contents
INTRODUCTION...........................................................................................................................3
Disruptive innovation theory...........................................................................................................3
Definitions, principles and processes of the theory................................................................3
Evaluation of the theory:........................................................................................................5
Application of the Disruptive Innovation Theory............................................................................7
Company background.............................................................................................................7
Historical development...........................................................................................................8
Application of the Disruptive Innovation Theory............................................................................9
Future development................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Innovation is defined as the creation of new ideas for implementing it for positive change.
Innovation in a business can be done on their products and processes. It is considered important
as it helps in organization for being in competition for long term by creating innovative products
and processes. Along with this, many organisations uses this strategy to launch their product and
service. It creates opportunities and they are necessary for the economic growth and success and
profitability of the organisation. The company uses different types of innovation theories as a
strategy for their products and services. In this report, disruptive innovation theory has been
chosen. Disruptive innovation is a theory that refers to entering into an existing market or in a
new market with their productive services that helps in creating value network. The disruptive
innovation theory is used when the traditional business methods get failed and it requires new
and fresh ideas and capabilities for organization to grow.
Disruptive innovation theory
Definitions, principles and processes of the theory
Definition
Disruptive innovation theory was given by the professor and business consultant Clayton
Christiansen in Harvard Business Review in 1995 (Agostini and Nosella, 2017). This Innovation
is also known as stealthy innovation in which the business is enter into new market or in an
established market by introducing their products and services.
Principles:
The principle of disruptive innovation theory is mentioned below:
 Companies are dependant customers and investor for resources: The customers and
investors are always the priorities of organisation and it helps in making the success of
the company. The customers always wanted to have high quality products at a cheaper
prices and organization manufactures the products according to their demands and also
organise themselves to fit those needs (Anzola-Román, Bayona-Sáez and García-Marco,
2018).
 The growth needs of larger companies cannot solve by small markets: The disruptive
innovation theory start strong very low end which means they have the capabilities for

start growing on small margins but on the other hand the large and established companies
cannot do that as the emerging markets are not sufficient for them to provide the growth.
 Markets that don’t exist cannot be analysed: The tools which are used for planning to
enter into the market cannot be used on destructive innovation and it is useful for
understanding the sustaining technologies (Cabrilo and Dahms, 2018).
 The capabilities of an organisation define its disabilities: The processes and values are
not flexible as they cannot adapt to low margin products which are organised and
produced high margin products. The employee of an organisation can switch from large
company to small company but the value and processes of large companies cannot be
switched as the same working environment of small companies.
 Technology supply may not be equal market demand: The organisation always
wanted to again high margin profit by providing products to their existing customers.
They are unable to analyse that it creates a vacuum for lower end and the low cost
technologies are there for customers who satisfy their basic needs (Ferreira, Fernandes
and Ratten, 2017). As they are engaged into a market which is competitive and the new
organization are introduced with lower price thus creating compelling reason for the
customer’s loyalty.
Process of the theory
The disruptive innovation was developed by Clayton Christiansen where he describes
that with the help of innovation new markets can be created by searching out the new customers.
He also discovered that the existing products can be improvised by this disruptive innovation
theory. The destructive innovation is proved to be a powerful tool where the small companies are
able to establish themselves as well as used for predicting them for entering into the new market.
This theory also shows that how challengers are able to come up with the innovation that are
consider to be inferior to incumbents which they gain a market photo old by competing with the
non consumption.
The disruptive innovation theory is started by targeting the markets which opt out of
participation in the existing market. The destructors are able to convert non consumers into
consumers by changing the competition level, launching the performance matrix phone analysing
the product category and also converting weaknesses into the strengths (Guisado-González,
González-Blanco and Coca-Pérez, 2017). The platform which is now created is enough for