This article was first published on Insights – Ripple
“Why do once successful, large companies often fail to adopt disruptive technology?”
The late Professor Clay Christensen at Harvard Business School posed this very question to his MBA students in the first class of his famous course titled: Building and Sustaining a Successful Enterprise (BSSE).
In a nutshell, disruptive technologies enable a new value proposition to initially address unmet needs in a market, and eventually overtake a mainstream market through continuous improvements. In many cases, the disruptive technology initially is adopted in a smaller, niche market, where particular new attributes of the technology are highly valued by customers— even though the technology may not initially satisfy some of the attributes that the mainstream market needs.
However, through rapid improvements, disruptive technology gradually starts to capture mainstream use cases, and even creates new demand by making the product or service accessible to a larger pool of users. Prime examples of a disruptive technology include personal computers and electric vehicles.
Large incumbent firms typically neglect the initial rise of disruptive technology, noting that the technology is not mature enough and that the niche market it addresses is insignificant compared to their highly profitable mainstream market. Slow-moving legacy companies begin adopting the disruptive technology only after the technology satisfies key attributes that the mainstream market demands. By this time, the market is already invaded by early adopters who are eager to move up the market from the niche, lower-end market.
It’s astonishing ...
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