Disruptive technology

A disruptive technology or disruptive innovation is an innovation that improves a product or service in ways that the market does not expect, typically by being lower priced or designed for a different set of consumers. In contrast to disruptive innovation, a sustaining innovation does not have an effect on existing markets.

Disruptive innovations can be broadly classified into low-end and new-market disruptive innovations. A new-market disruptive innovation is often aimed at non-consumption, whereas a lower-end disruptive innovation is aimed at mainstream customers for whom price is more important than quality.

Sustaining innovations may be either discontinuous or continuous. Revolutionary innovations are not always disruptive. Although the automobile was a revolutionary innovation, it is not a disruptive innovation, because early automobiles were expensive luxury items that did not disrupt the market for horse-drawn vehicles.

To ensure this quality in its product, the disruptor needs to innovate. The incumbent will not do much to retain its share in a not so profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving.