Managing Innovation

Managing Innovation

Table of Contents
INTRODUCTION...........................................................................................................................3
Disruptive innovation theory...........................................................................................................3
Definition, principles and processes of this theory......................................................................3
Evaluation of this theory..............................................................................................................6
Application of disruptive theory on Spotify....................................................................................7
Company background..................................................................................................................7
Historical development..............................................................................................................10
Disruptive innovation for future development..............................................................................10
Future Development..................................................................................................................10
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Innovation can be defined as idea, practice or product that is perceived as something new
or something that has not been in existence. Changes made in existing products are also
sometimes considered as innovation (Christensen and et.al., 2018). Innovation is highly
important for the growth and development of the organisations. This report will discuss about
disruption innovation theory, disruptive innovation is an innovation that creates new market and
value network and eventually disrupts an existing market and value network. This type of
innovation displaces established market-leading firms, and products. Disruptive innovations are
mainly produced by outsiders known to be entrepreneurs and or organisations that are start-ups
rather than existing market leader organisations. Disruptive innovations, in other words can be
explained as innovation or products and services they are new and their existence lower market
value for other existing products to fulfil similar needs. This report will discuss about disruptive
innovation theory and later discussion will contextualise Spotify. Followed by this report will
involve discussion regarding future development Spotify can make under as per disruptive
innovation theory.
MAIN BODY
Disruptive innovation theory
Definition, principles and processes of this theory
Disruptive innovation can be defined as described as a process in which a product or
service initially takes place at bottom of the market. This product and service provided is less
expensive and highly accessible and in harsh ways moves upmarket and eventually displacing
established competitors of the company. Disruptive innovation term was coined by Professor
Clayton Christensen at Harvard Business School and then become ubiquitous. Unlike
breakthrough technologies that make existing and good products better, disruptive innovations
make products and services more accessible and affordable and this makes them available to the
larger population (Zach, Nicolau and Sharma, 2020).

Principles of Disruptive Innovations
Companies depends on customers and investors for resources
This is first principle of disruptive innovation that for the purpose of financial and other
resources companies and disruptive innovators mainly depends on customers and investors.
Disruptive innovators do not consider the idea that customers do not want yet. This means that
they believe that their innovation, product is required for customers. Investor is another
important element of disruptive innovation in which companies depends on investors for the
resources because disruptive innovation has high demand in market. This is the reason that
disruptive innovations require high amount of investment and this requirements can only be
fulfilled by investors,.
Small markets do not solve growth needs of large companies
This principle of disruptive innovation states that it is not possible for large and
successful companies to enter into or create a disruptive market. This is because disruption starts
at small level and it is easy for a small company to grow in small market and then create a large
market for their products and innovation whereas large companies’ growth needs cannot be
fulfilled by small markets of disruptive innovation (Emile and Chenevier, 2017). Large
companies often wait that companies of disruptive innovations or disruptors are large enough in
order to be bought by them. This is because these way disruptors will be able to contribute in
their growth. This is also one of the reasons that disruptors are created by new innovators or
outsiders rather than existing market leaders.
Markets that do not exist cannot be analysed
This means that gathering data and conducting research with old techniques when there is
no existing market is impossible. This is why disruptive innovators needs to ensure that they are
not using existing planning and research technique for their disruptive innovations. In order to
make research it is important that organisations are using explorative research when they are
applying disruptive innovation and planning of the company also needs to be based on
explorative research of the market regarding innovative product (Leavy, 2018). In other words,
disruptors innovations are new and there is no existing market for them, this way they do not