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Disruptive Innovation: Where Does the Growth Come From?

Updated: Nov 28, 2019

Every business leader agrees that innovation is essential. But nobody can quite agree on what it innovates. Even though you try to innovate something, sometimes you will end up with an unexpected outcome or you may fail several times. The best new products and services frequently offer some innovative characteristics such as touch screens, LED Displays, voice recognition, etc.

The new products and services innovation would be ground-breaking with advanced technologies such as 3D printing and nanotechnology. Sometimes, Innovations do not always mean advanced technology; it can be merely taking something that has long been utilized or enjoyed in one market, such as food, retail items, etc.



Sustaining Innovation


Sustaining innovation is the response to the needs of customers in the existing market and creating products that satisfy their future requirements. If the product does not innovate according to the market condition, it will be wiped out soon from the market, and the new product will fill the vacuum. Business environmental changes always encourage to innovate the product by adding several features, benefits, etc. to sustain the product in the market.


Disruptive Innovation


Many people misunderstand the difference between sustaining and disruptive innovation. The primary differentiation between sustaining innovation and disruptive innovation is that sustaining innovation comes from listening to the needs of customers in the existing market and creating products that satisfy their predicted requirements for the future while disruptive innovation creates upmarket products that are affordable to the mainstream. Sometimes it will create a new market separated from the mainstream; markets that are unknowable at the time of the technologies’ conception.


For instance, the first computer invented by J. Presper Eckert and John Mauchly at the University of Pennsylvania in1946 occupied about 1,800 square feet and weighed almost 50 tons. However, IBM introduced the desktop in 1976 at $1,565 worth which is about $6,951.53 today. But, computers are available from $ 250 in Colombo to afford the majority of the people. The computer has disrupted the traditional typewriter and has done a better job than the typewriter.

Disruptive innovations can be either “low-cost” or “new market.” Disruptive innovations, in general, tend to be more straightforward, less expensive, and more convenient than products available in the market. Low costs result from lower profit margins; however, due to the high demand, a company can get a sudden growth and end up with sufficient profit.

Low-cost disruptive innovations make a change in the fundamental customer demand patterns. Most of the time it makes demand wave towards the product, as a result of this, the demand for existing products may reduce. Newmarket disruptions appear on a new brand performance that attracts customers to the market. These customers can be referred to as “non-consumers” because they were not part of the original marketplace.


Many countries try to bring about large-scale changes in economies, labour force expansion, urbanization, and industrialization. From the Industrial Revolution of the late 18th and early 19th centuries, technology has played a significant role in empowering growth and transforming economies. Technology makes it very comfortable to do things and to create entire changes in every angle, including businesses, environment and culture.

It was during the period of the Industrial Revolution, that most of the essential innovations took place; and for example, the steam engine invented by James Watt disrupted the transportation industry significantly.


Can Uber disrupt the Indian traditional travel market?


Many argued that the disruption of the transportation market is hybrid but today anyone can realize that it is not, sometimes it will be Peapod, Thorium powered vehicle or a similar thing which provides individual transportation solution.


The above table shows how transportation time was reduced by the impact of the railway system developed. Many argued that the disruption of the transportation market is hybrid but today anyone can realize that it is not, sometimes it will be Peapod, Thorium powered vehicle or a similar thing which provides individual transportation solution.


During the time of the next economic growth, which we can nominate as the fourth Industrial Revolution (4IR), is expected to produce at least $3.7 trillion by 2025. The disruptive innovation is the driving force of the fourth Industrial Revolution; it will be faster than anticipated and disrupt every industry. The economic impact and technology disruption, are the two effects that go together and both are critically important to accelerate the growth. All the processes are often driven by technological innovation to increase productivity by reducing wastage.


Changing with Disruptive Innovation


Since the Industrial Revolution, innovators tried to play an increasingly important role in bringing disruptive technologies to day-to-day life. However, policymakers should take some actions to gain the fruitfulness for the economy. The people who make strategic decisions have multiple responsibilities to minimize conflicts when disruptive innovations come to the market. Automation of work will increase productivity, but making a potential impact on unemployment and creating social issues, finally affect the economy as well.


This article published on 06.05.2018 Sunday Observer

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©2020 by Dr.Himendra Balalle. 

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