The result of disruptive innovation is when “a small young company beats an industry giant on its own terms” (YouTube). This is the theory of professor Clay Christensen and it is related to the fact that successful companies are concentrated on sustaining innovation where the products that already exist are being upgraded to indulge the customers who pay a lot of money. However, they neglect regular customers that are interested in alternatives which cost less money. Young entrepreneurs fill out this gap with a basic product that satisfies the needs.
Big companies aim at high profile customers by upgrading the products making them unnecessarily expensive, while young entrepreneurs called “the disruptors” (YouTube) adjust the product so that it can be appealing for the great number of people. The new products are easier to use and the entrepreneurs “take over the market” (YouTube). The example of this process is when companies, like Toyota and Hyundai, produce ordinary cars, but later add more features which make these luxury vehicles. The solution could be for the company to produce their own disruptive innovation. The focus had to be on the needs of the customers which are basic because the most of the profit is gained through this. The cost of production has to be lowered and the production itself should be observed as a separate project within the company.
Procter & Gamble created white stripes for teeth whitening which is less expensive than going to the dentist’s. This is an alternative that many people are willing to use. The result of all of this is the creation of the new markets while the existing are being reshaped. The world is changing in a fast way and growth has to be sustained. It is more profitable to be a disruptor than to be disrupted because being disrupted means that another company will be more successful.
Organizations are benefiting from disruptive innovation because they are launching new products which are basic and an alternative to existing high-end products that are luxurious and harder to use. Most customers do not need a product that is unnecessarily expensive because the basic product has been upgraded. If the big companies do not want to be replaced by young companies, they have to invest in disruptive innovation. The benefit lies in the fact that the existing companies will not lose their customers and new companies will attract customers by offering a cheaper product that has the same essential features. The example of disruptive innovation is when a car manufacturer like Hyundai continues to produce basic models instead of focusing only on luxury cars.
There are not many limitations to disruptive innovation, but established companies could be too interested in upgrading instead of investing in basic products and this is where the young entrepreneurs jump in and become a competition. The limitation can be that customers might want to try the new products of young companies instead of sticking to old ones. On the other hand, some customers might want to remain loyal to the companies with reputation. An example of disruptive innovation could be a low-cost soap which would be as useful as expensive soaps. Everybody needs to use soaps on a daily basis and people would be interested in the least expensive kind of soaps that is still efficient instead of buying expensive products. Cosmetics is a department which sells products based on the name of the brand and most customers just want to be able to use a soap for its original purpose which is to maintain personal hygiene. Disruptive innovation is a competitive strategy which can create market turn-overs and get companies in and out of business.
Works Cited
"The Explainer: Disruptive Innovation ." YouTube. Harvard Business Review, 2013. Web. 2 Mar. 2016. <https://www.youtube.com/watch?v=mbPiAzzGap0>.
