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What is disruptive technology? & Financial Library

2017-06-05 19:58 [TECH] Source:Netword
Guide:This definition explains the meaning of disruptive technology and how it contrasts with sustaining technologies. We also list examples of disruptive te

A disruptive technology is one that displaces an established technology and shakes up the industry or a ground-breaking product that creates a completely New industry.  

Harvard Business School professor Clayton M. Christensen coined the term disruptive technology. In his 1997 best-selling book, "The Innovator's Dilemma," Christensen separates New technology into two categories: sustaining and disruptive. Sustaining technology relies on incremental improvements to an already established technology. Disruptive technology lacks refinement, often has performance problems because it is New, appeals to a limited audience and may not yet have a proven practical application. (Such was the case with Alexander Graham Bell's "electrical speech machine," which we now call the telephone.)

Here are a few examples of disruptive technologies: 

In his book, Christensen points out that large corporations are designed to work with sustaining technologies. They excel at knowing their market, staying close to their customers, and having a mechanism in place to develop existing technology. Conversely, they have trouble capitalizing on the potential efficiencies, cost-savings, or New marketing opportunities created by low-margin disruptive technologies. Using real-world examples to illustrate his point, Christensen demonstrates how it is not unusual for a big corporation to dismiss the value of a disruptive technology because it does not reinforce current company goals, only to be blindsided as the technology matures, gains a larger audience and market share and threatens the status quo.

See also:  disruptive innovation, digital disruption, IT innovation, business innovation, IT transformation

This was last updated in December 2016

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