What is Disruption, really?

Disruption is a widely used word which has different meanings in different contexts based on how it is used. Sometimes this varying usage causes confusion.

Most often, disruption is used to denote a displacement of incumbent firm by another firm (e.g. Apple disrupted Blackberry) and it originally refers to what Schumpeter called “creative destruction”. One must remember that such a phenomenon is only known in hindsight and thus has little predictive power; one cannot say today whether Tesla will disrupt GM or whether Amazon will disrupt Walmart.

The term also refers to innovations that can be disruptive. In this context, disruptive innovation is often used in three different ways. First and perhaps most commonly, it refers to an innovation that disrupts an incumbent. As mentioned above this is only known in hindsight and thus not a predictive term.

Second, and a very common usage is to refer to a very big innovation that involves massive change. For example, someone may say smart watch is a disruptive technology because it uses a total different technology than a quartz watch. While people use it to denote a massive change in technology, they often also assume that such a massive change may lead to displacement of an incumbent firm. This assumption is incorrect because often large and dominant firms do not get disrupted due to a massive change in technology. Nevertheless, people often use the term disruptive when they mean significant (as opposed to a minor) innovation.

Third, and probably most accurately, it refers to a disruptive innovation as coined and originally used by Clayton Christensen in his book Innovator’s Dilemma. In that sense, it refers to an innovation that changes the key purchase criteria of a customer. For example, a mobile phone is a disruptive innovation for landline phones because customers begin to value a new purchase criteria (mobility of a phone). Christensen found in his research that when the key purchase criteria changes, incumbent firms find it hard to respond and thus they get disrupted. Others found evidence that this doesn’t always hold true. Nevertheless, an innovation may be disruptive ( in Christensen’s terminology ) but may not disrupt an incumbent (in Schumpeter’s terminology)

Not all disruptive innovations disrupt, and not all disruptions are caused by disruptive innovations alone. Click to Tweet

The confusion between disruption and disruptive innovation led to a scathing attack by New Yorker on Christensen’s work (What the Gospel of Innovation Gets Wrong). In my opinion, the problem is not with Christensen’s work but with the fact that the term he coined was also confused with how it is normally used in a variety of contexts. It is important to remember that disruption is a rich field of study with over 80 years of research and is not the same as disruptive innovation which is a very specific type of market change when it refers to change in purchase criteria of a customer segment.

In my work on disruption of firms (SURVIVAL, The dark side of innovation, and Deer in the headlights: Response of incumbent firms to profit destroying innovations) I studied how incumbents tend to get disrupted when they face a profit destroying innovation. I found that often firms find it hard to respond to such innovations but sometimes firms do create solutions that help them avoid getting disrupted.

To me what is most interesting is how a firm can survive for decades and centuries after going through all kinds of massive challenges. What I find most impressive is that after 80 years of research on disruption, a critical research finding is that disruption is not a predetermined fate of a firm irrespective of what kind of innovation or challenge it faces.