Key Drivers of Disruptive Innovation

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Trends in Global Business Environment
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Introduction
Disruptive innovation refers to the type of innovation that assists in creating a new
market as well as a value market. Eventually, the innovation disrupts the existing market and
value network, thus displacing an existing technology. Specifically, the term disruptive
innovation is applied in technical literature and business to define the type of innovations that
improve a service or a good in several ways that are not expected in the market. Typically, the
innovation enhances both products and services by designing them tailored to a specific group of
clients in a new market and later through reducing prices in an existing market. The introduction
of the new technology or a new business model enhances the adoption of a solution that was
initially unavailable in the traditional market as a result of the reduced price of adoption.
Eventually, the adoption becomes global and the traditional also ends up adopting the solution
and as a result, becomes “disrupted”.
To determine the potential drivers of disruptive innovation, it is worth referring to
resources, processes, and values (RPV) that are common in an affected company. Referring to
the theory of disruptive innovation, the three elements are together referred to as the RPV-
framework. Based on a company’s resources that are either tangible or intangible, a core driver is
accessing high-quality ones. As a result, strong Research and Development capabilities have the
potential of resulting in merging disruptive technology. Processes also are drivers of disruptive
innovation but they should foster creativity as well as entrepreneurial thinking. Nonetheless,
combining recognition with a sensible degree of risk-taking is the other driver that is capable of
carving a disruptive innovation. The report aims at determining the key drivers of disruptive
innovation. The report’s body identifies the finding of studies conducted on the topic. The

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discussion section summarizes the literature review by highlighting the most important findings.
The conclusion provides a consensus on the topic.
Key Drivers of Disruptive Innovation
Sustainability
Questions relating to sustainability can no longer be ignored. Individuals, as well as
organizations, are discovering disruptive innovations aimed at tackling such issues and
transforming entire business segments. In the recent decade, there have been many disruptive
innovations but more disruptions are still been forecasted and which are being driven by the
sustainability problem experienced universally (Carayannis, Sindakis and Walter, 2015, pp.92).
Renewable energy that comprises of energy efficiency along with energy storage has begun to
usurp the industry of fossil fuels. Among other means, this is just one example of how
sustainability is driving the emergence of several disruptive innovations. Other such technologies
which are likely to have similar effects include 3D printing, fuel cells, including electric
vehicles. Sustainability is among the key drivers of disruptive technology in the current
competitive business environment (Gobble, 2012, pp.65). The primary reason behind this is that
the world requires to deal with issues relating to the environment as well as social issues. The
issues comprise of resource scarcity, climate change, air along with water pollution, and
increasing demand of an affluent middle class, as well as a growing and an aging population.
The need for tackling sustainability issues is reflected in the increase in regulations. For
example, recent reports made by the New Climate Economy made claims that it was possible for
cities to save approximately $17 trillion if they were able to cut on greenhouse gas emissions,
identifying the fact that it becoming sustainable involves opportunities and risks. Nonetheless,

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consumers also demand sustainability both in the products an organizational strategies, - this has
resulted in business leaders paying more attention to disruptive technologies if they intend their
companies to become sustainable (Seebode, Jeanrenaud and Bessant, 2012, pp.199). According
to the UN Global Compact, the Accenture CEO Study indicates that 97% of CEOs believe that
sustainability will be crucial for the future success of their organizations. In addition, PwC also
notes that 75% of CEOs believe that their firms are creating new products as well as services
with the intention of responding to climate change while 25% of these CEOs claim that
sustainability has been a key driver that is accelerating the growth of their businesses (Klewitz,
Zeyen and Hansen, 2012, pp.452). Organizations that wish to tap the disruptive power of
sustainability are producing products that help the customer become more sustainable. Example
of these brands includes Gap and Marks & Spenser that sell clothes capable of being washed at
30 thus reducing energy bills.°C
Nonetheless, other sectors such as the financial service industry are also not immune to
these disruptive innovations as portrayed by the growth and demand for crowd-funding and
internet banking. As a result, sustainability has also become an increasingly essential factor in
this industry. This has either been through the introduction of new products that consists of green
bonds or even initiatives aimed at disclosing and reducing the portfolios’ carbon footprints that
may include the Montreal Carbon Pledge and the Asset Owners Disclosure Project. However, it
is not only the new products that are likely to disrupt the new ones but also new ways of
conducting business as well (Schaltegger, Lüdeke-Freund and Hansen, 2012, pp.101). As a
result, in the wave of sustainability as a driver for disruptive innovations, collaboration, as well
as a partnership, will be an important factor for organizations and their leaders.