Disruptive Innovation

These flashcards cover key concepts related to disruptive innovation, distinguishing between various types of innovations, market dynamics, and the implications for businesses in responding to industry changes.

Disruptive Innovation

A theory that explains how smaller companies with fewer resources can successfully challenge established businesses by targeting overlooked segments of the market.

Incumbents

Established companies that dominate their market and often focus on improving products for their most profitable customers.

Low-end foothold

A market segment where incumbents overshoot customer needs, allowing disrupters to provide adequate products at a lower price.

New-market foothold

A strategy where disrupters create a market for nonconsumers, converting them into customers.

Sustaining Innovations

Improvements to existing products that target the needs of established customer bases without fundamentally changing market dynamics.

Disruption Theory

A framework for understanding how disruptive innovations challenge established companies and alter market conditions.

Market-making business model

A business model that connects consumers with service providers, often creating new markets, as seen with companies like Uber.

Inadequate responses by incumbents

When established companies fail to adequately respond to disruptive innovations, often due to focus on maintaining their core business.

Empirical findings

Results derived from research and observation that demonstrate the correlation between disruptive innovation and market performance.

Incremental advances

Small improvements over time that may not fundamentally alter a product but enhance its appeal to current customers.

Trajectory of improvement

The rate and direction at which a disruptive innovation evolves, crucial for determining its potential impact on mainstream markets.

Online learning as a disruptive innovation

The use of technology in education that offers accessible and often affordable courses, potentially revolutionizing traditional higher education.

Tesla Motors' market position

The company's focus on high-end electric vehicles, which illustrates the complexity of categorizing innovations as disruptive.

Overlap of incumbent and entrant perspectives

The challenges faced by companies that are both established players in a market and simultaneously trying to innovate or enter new markets.

Disruption process

A cycle in which disrupters capture market share from incumbents by evolving from niche to mainstream markets.