Disruptive innovations, often, appear as magical outcomes. However, careful analysis of disruptive innovation examples reveals underlying repeatable patterns. These patterns are useful for incumbent firms to predict and respond to take advantage of unfolding creative waves. Besides, aspiring new entrants or startups can leverage it as an entry opportunity. Moreover, these patterns offer guidance to society as a whole to prepare to leverage and minimize negative consequential effects on jobs, inequality, and many more.
Our technology-led progression is a constant process of creative destruction. Subsequent technology cores offer us the opportunity to bring better substitutions to cause destruction to existing products and industries. Along the way, start-ups grow, even making giants bankrupt. By taking advantage of disruptive forces’ emergence, often incumbent firms also succeed in destroying their own products with new ones and expanding their market base. Here are a few disruptive innovation examples to shed light on such dynamics.
Characteristics of Disruptive innovations
Ofen, disruptive innovations unfold as magics. However, their consequential effects are transformative. They create opportunities for new entrants. Besides, they also destroy jobs and firms. Hence, we should look for reoccurring common patterns. It has been found that examples of disruptive innovations have some common characteristics. The following sections explain some of them.
Potential to offer better substitute at a lower cost
It should support a product’s conceptualization, which could be a better substitute for an existing product. For example, digital image sensor technology in the 1970s had the potential to form a new type of camera to be a substitute to the film-based one. Similarly, inkjet technology had the potential to support a new type of printer to grow as a strong substitute to dot-matrix printers.
Often initial version looks primitive
The conceived substitution should have the potential to offer a far better quality product at a lower cost than the existing one. But often, the initial emergence is in a primitive form. For example, the initial version of the digital camera was primitive in nature in comparison to the film-based one. But the solid-state sensor technology had the potential to support the growth of digital cameras as a strong substitute to the film-based one.
Primitive products should create appeal to some customers
There should be some customers for the initial primitive version of innovations around new technology core. For example, parents bought and gave a low-quality digital camera, in the 1980s, to children for having fun of instant photography. On the other hand, the defense community started using a low resolution, noisy image sensors to equip fighter jets, missile defense systems, and other military equipment to detect and track targets. It has been observed that defense is the customer of primitive products at the early stage of technology development having disruptive potential.
Technology should be highly amenable to progression
The underlying disruptive technology core should be highly amenable to improvement through R&D. For example, to capitalize on this opportunity of digital camera, image sensor maker Sony made a substantial investment to make successive releases of image sensors better and cheaper. Such progress was vital for making the digital cameras a strong substitute to the film camera. Subsequently, it disrupted the film camera along with the film-based imaging industry.
Quality improvement and cost reduction drive the destructive force
Quality enhancement and cost reduction drive the innovation towards the center of existing products’ customer base. It also drives the innovation towards a new customer base, residing at the periphery. Eventually, the new product becomes a strong substitute for the existing one, causing disruption to the existing product and the industry in producing it. In the process, disruptive innovation creates a much larger customer base with an enhanced value proposition.
Examples of creative destruction failing to be disruptive innovation examples
Often, we perceive that creative destructions unfold causing disruption to incumbent firms. However, here are a few examples of creative destructions leveraged by incumbent firms to destroy their own products. Subsequently, they avoided the disruptive effects.
Apple—creative destruction to iPod
Upon succeeding with iPod in giving the 2nd life to Apple, Steve Jobs got nervous with the prediction that smartphones having music players would likely invade the iPod market segment and took away their lunch. Upon being paranoid about this likely invasion, he approached the board to pursue iPhone, consequentially causing disruption to iPod’s business. With the success of the iPhone, iPod started to lose business, eventually coming to an end. If Steve Jobs had not pursued this creative destruction strategy, Apple’s history could have been different. However, in the evolution of smartphones, there are many examples of disruptive innovation.
Major TV makers (Sony, Samsung, LG)—creative destruction to cathode-ray tube
In the 1950s and 1960s, the evolution of the TV industry suffered from a creative destruction wave due to the transistor’s invention. Instead of taking the transistor’s advantage to cause disruption to vacuum tube-based design, incumbent TV makers like RCA resisted it. But Sony created a new wave of destruction out of this technology making RCA bankrupt. There was a 2nd major invasion of disruptive technology in the TV industry. That is the growth of LCD/LED flat screens as a better substitute to CRT. Instead of resisting, major Asian TV makers like Sony, LG, and Samsung proactively drove the growth of flat-panel TV sets causing disruption to their past CRT television business.
On the other hand, such a smart move saved them from the disruption caused by the newcomers; furthermore, they expanded their TV business market. Due to higher quality, greater portability, lower cost, and low power consumption LED TV sets are even penetrating rural communities of developing countries like Bangladesh and India.
Microsoft—to disrupt command-based DOS with Windows
Through a deal with IBM, Microsoft got a boost with its command-driven Disk Operating system for PC. Upon observing Apple’s graphical user interface, Bill Gates predicted the future of user interface innovation around the windows, mouse, folder, etc. Instead of waiting to get disrupted, he directed Microsoft to vigorously pursued a graphical user interface-based new operating system called Windows. This creative destruction of Windows to DOS played a significant role in Microsoft’s success and survival.
Canon—digital imaging to cause disruption to a film camera
Canon started its journey in the 1930s by replicating Leica’s film camera. Upon incremental innovation, Canon made success in camera making. Upon seeing the digital imaging potential, like Kodak, Canon did not resist. Rather Canon pursued the development of digital cameras to cause disruption to its film-based imaging business.
There are many such examples that incumbent firms leveraged as opposed to being victims. In absence of timely decisions, such creative destructions could have been disruptive innovation examples. How to predict and pursue such a journey is critical in the world of innovation. Failure to make technology switch to pursue creative destruction often leads to the death of giants.
Disruptive innovation examples
As explained before, incumbent firms can leverage creative waves to expand their business opportunities. However, not always, incumbents firms succeed. Sometimes, they suffer from disruptive effects. Here are a few examples of the destruction of incumbent firms due to the formation of the waves of creative destruction due to disruptive technology core. Hence, we should carefully analyze the underlying patterns for responding accordingly.
Sony took advantage of transistor technology to cause disruption
Transistor technology invention in 1947 created a new possibility. Sony took advantage of this possibility in creating a fortune, making consumer electronics products like radio receivers and TV sets affordable to many. But the same technology wave caused destruction to giants like RCA or Zenith.
The growth of solid-state image sensors caused disruption to Kodak
The invention of the electronic imaging sensor (charge-coupled device) at the Bell laboratory opened a new era of innovation in imaging and camera. Again, Sony succeeded in leveraging it; but due to digital imaging’s destructive force, American icon Kodak got bankrupt.
PC caused destruction to the mini-computer industry
The PC created an opportunity for Apple and Microsoft to get birth. They became giants because of the emergence of PC technology. But along the way, giants like IBM or DEC faced serious destructive force, making DEC bankrupt. However, was there a way for incumbents to avoid such a catastrophe?
Apple used multi-touch technology to reshape the smartphone industry
Apple succeeds by leveraging multi-touch technologies. But mobile handset-making leader, Nokia, became bankrupt due to the destructive wave created by multi-touch. On the other hand, Samsung emerged as a success story for embracing the new wave of creative destruction of multi-touch.
The invention of technology having the potential of creative destruction is both blessing and a curse. Consequential effects depend on decisions. By leveraging it, incumbent firms can innovate better substitutes of their existing products, expand the customer, revenue, and profit. On the other hand, new entrants can take advantage of it to pursue innovation to bring substitutes to existing products, often causing disruption to incumbent giants. Hence, the decision-making exercise should look into the underlying pattern, as opposed keep relying on the magical outcomes.
The history is riddled with examples that start-ups, by leveraging disruptive technologies, succeeded in causing disruption to incumbent giants’ business. In fact, the uprising of emerging technology is at the core of this dynamics. Hence, to protect from the destructive force and leverage creative force, often created by the emergence of the same technology core, forecasting technology, market, and competition is vital. Of course, an appropriate strategy and actions must follow such a forecast for coping with challenges and leveraging opportunities. Otherwise, discontinuity opened by creative destruction may allow starts to grow as giants creating disruptive innovation examples. Therefore, both aspiring startups and incumbent firms should carefully analyze underlying patterns to take the opportunity and avoid negative implications.