The Disruptive Innovation Theory Framework, developed by Clayton Christensen, outlines how new entrants in a market can disrupt established players by creating simpler, more accessible, or more affordable products that initially target a niche segment. Over time, these innovations move upmarket and disrupt the status quo, forcing traditional companies to adapt or exit. This framework is used to understand market dynamics, guide strategic planning, and foster innovation that capitalizes on overlooked segments.
Identify the market segments that are overlooked by incumbents. | Develop a simpler or more affordable product that meets the needs of this segment. | Gradually improve the product to appeal to more demanding customers. | Scale the innovation to other markets and segments as it gains traction. | Continuously innovate to stay ahead of competitors who may imitate the disruptive strategy.
Thoroughly research and understand the target segment. | Maintain flexibility to adapt the product as market needs evolve. | Secure sufficient funding to sustain operations until the disruptive product gains sufficient market share.
Enables smaller companies to compete with industry giants. | Focuses on untapped market segments, leading to new opportunities. | Encourages continuous innovation and improvement.
Risk of failure in untested markets. | Potential for incumbent pushback or aggressive competitive responses. | Requires significant investment in innovation and market development.
When entering a market dominated by large players. | When there is a clear opportunity to serve an underserved segment of the market.
In highly regulated industries where changes are slow. | When the market is saturated and highly competitive with little room for innovation.