Disruptive Innovation



How does a new company beat an industry giant on its own turf?

How do innovators always find new ways to add another dimension to established markets?

How do new products make entrances that completely reshape our lives?


There is no shortage of stories where established businesses are disrupted by new technologies and start ups, who redefine markets and deliver value in new ways. This is what is known as “disruptive innovation”. Apple, Uber and Amazon are just a few notable companies that have been disruptive in recent years. But disruption is not new. It has been around for many generations.


Disruptive innovation displaces an established technology, shaking up the industry. Alternatively, it can create a ground-breaking product that forms a completely new industry. The way businesses and industries operate is significantly affected by disruptive technologies. Its effect often forces competitors to alter the ways that they approach their business, due to fear of losing market share or becoming irrelevant.


“Organizations don’t need 1,000 people doing reconciliations if they have a system that does reconciliations with just 10 people overseeing it.” – David DiCristofaro, Partner, KPMG


Disruptive technologies can appear suddenly, or may take time to gradually yield results. An example of a disruptive technology is Amazon’s use of ecommerce to disrupt the retailing industry. This has allowed the company to significantly cut expenses relating to operating physical stores, giving Amazon a competitive advantage over the industry.


An opportunity to strike

Established companies tend to focus on sustaining innovation, upgrading existing products and services to attract higher paying customers. Yet, they often ignore customers who simply want low cost alternatives. Larger companies also tend to be less flexible, and so have more difficulty in adapting to new threats. This creates an opportunity for new entrepreneurs, who can provide this basic offering. They focus on the needs of the overlooked customer segment, and the new start ups can use this advantage to rapidly gain customer base over time.


The big market players focus on more profitable customers, and begin to over serve, adding unnecessary services that no one wants to pay for. Meanwhile, disruptors focus on improving their product, seeking to meet the needs of the overlooked customer segment. By the time the larger company notices this, the disruptor has already started to take over the market.



Disruptive innovation creates new markets, and reshapes existing ones. Disruption need not be scary to companies, but they should seek to embrace this change, incorporating flexibility into their culture, and developing their own disruptive innovations. To achieve growth in a fast changing world, companies need to be a disruptor. They cannot afford to always be disrupted.



Although committing to disruptive innovation can bring many opportunities to aspiring entrepreneurs, it needs to be understood that such investments also carry many dangers. Investing in a new technology can be very costly, and often times can yield no results. Additionally, many companies do not adequately account for the legislative risks that come with its adoption. This risk may potentially erupt, causing a regulatory, customer or safety issue that may have huge financial or reputational consequences. Studies from KPMG have shown that up to half of companies who adopted mobile devices have not included them in recent IT risk assessments. This risk will only grow as companies seek to increase their investment in such technologies. Nonetheless, if companies are willing to go the extra mile to do the required research and ensure that they meet all regulatory requirements, investing in innovation disruption may be a risky venture, but it can yield great results.


From past to future

There are many areas in which disruptive innovation has changed our lives. 20 years ago you would have to bring a paper ticket to the airport in order to catch your flight. These tickets would have to be purchased at the front of the airline desk, often on the day that the flight is scheduled to take off. These days, it is difficult to imagine checking in at the airport without your phone. This has created a great convenience to our lives, and really showcases how much innovation can enhance our lives.


“Telephone[s] did not come into existence from the persistent improvement of the postcard.” ― Amit Kalantri


Looking forward, the future has a lot to offer in terms of innovation. One profound innovative company that is currently in the making is Waymo. Waymo is a self driving technology development company that has already started to launch self driving taxi services in America. One day, it may add yet another dimension to the automobile industry, perhaps pioneering the era of self driving cars where we cannot even imagine what a steering wheel looks like.


With innovation seeing the sky as the limit, we can only imagine what exciting breakthroughs await us. Who knows what the future has to offer us...



Harvard Business Review

Darden MBA


Leads University Business School

Isaac Ng