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disruptive innovation

For the last few years I have been fascinated with Clayton Christensen's theory of disruptive innovation and its application to business, politics, education, and insurgency models. What I find most interesting is that his theory, featured in both "The Innovators Dilemma" and "The Innovators Solution" provides a prescription for a small entrant with less resources to compete with and beat a large incumbent. To understand his theory we begin by looking at a set of customers for a good or service. A simplified segmentation of the market is defined as non consumers, mainstream customers, and higher end customers. The incumbent starts by creating a good or service that appeals to the mainstream consumer. Upon reaching market segment saturation, the company looks up market and innovates on the product to capture the higher end more margin rich segment. Often tech companies competing in the same market play this leap frog game of matching innovation to control more of the commodity market. Clayton defines these as sustaining innovations. In business the process is called profit maximizing resource allocation and the right competitor can use it to force an incumbent out the top end of the market. By continuing to innovate, the incumbent creates bloated products or services that have more value or performance than the consumer can utilize. The logic is that if I can please my most demanding customers then my main stream customers will be also be satisfied, but in reality it ...

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