What are the best Disruptive Innovation Examples?
Remember Blockbuster Video?
At its peak in the early 2000s, this video rental behemoth had over 9,000 stores and dominated the home entertainment industry. But 10 years later, Blockbuster filed for bankruptcy and by 2014, all remaining company-owned stores had closed. What happened? In a word: disruption. Netflix introduced a disruptive innovation in movie rentals that would decimate Blockbuster and change how we watch movies at home. This is just one piece of evidence among the top disruptive innovation examples that can shake up entire industries.
It is time to pay attention to Disruptive Innovation, which has transformed not only the industry itself but also how we live, learn, and work. This article goes deeper into the concept of innovative disruption, top-notch disruptive innovation examples, and predictions for the future.
Table of Contents:
- What Is Disruptive Innovation and Why Should You Care?
- 7 Best Disruptive Innovation Examples
- #1. The Encyclopedia Smackdown: Wikipedia Displaces Britannica
- #2. Taxi Takedown: How Uber Changed Urban Transportation
- #3. Bookstore Boogaloo: Amazon Rewrites the Rules of Retail
- #4. Creative Destruction: How Digital News Dethroned Print Journalism
- #5. Mobile Makes a Call: Why Apple’s iPhone Trounced Flip Phones
- #6. Banking Breakthrough: How Fintech Is Disintermediating Finance
- #7. The Rise of AI: ChatGPT and How AI Disrupts Industries
- What’s Next: The Upcoming Wave of Disruptive Innovation
- Key Takeaways
- Frequently Asked Questions
What Is Disruptive Innovation and Why Should You Care?
Disruptive innovations refer to the emergence of products or services with a different set of features, performance, and price attributes that differ from mainstream offerings.
Unlike sustaining innovations which make good products better, disruptive innovations often appear underdeveloped at first, and rely on a low-cost, low-profit business model. However, they introduce simplicity, convenience, and affordability that open up new customer segments.
As startups target overlooked niche consumers, disruptive innovations steadily improve until they displace established market leaders. Disruption can topple legacy businesses that fail to adapt to these new competitive threats.
Understanding the dynamics of disruptive innovation is key for companies navigating today’s ever-changing, hyper-competitive business landscape filled with disruptive innovation examples.
70% of the companies in the S&P 500 index in 1995 are not there today. This is because they were disrupted by new technologies and business models.
95% of new products fail. This is because they are not disruptive enough to break into the market.
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Best Disruptive Innovation Examples
Disruptive Innovations appeared in almost all industries, completely upset structure, transformed consumer habits, and achieved massive profits. In fact, many of the most successful companies in the world today are disruptive innovators.
#1. The Encyclopedia Smackdown: Wikipedia Displaces Britannica
Here comes one of the must-have disruptive innovation examples, Wikipedia. The internet drastically disrupted the tried-and-true encyclopedia business model. In the 1990s, Encyclopaedia Britannica dominated the market with its prestigious 32-volume print set costing $1,600. When Wikipedia launched in 2001, experts dismissed it as amateur content that could never rival Britannica’s scholarly authority.
They were wrong. By 2008, Wikipedia had over 2 million English articles compared to Britannica’s 120,000. And Wikipedia was free for anyone to access. Britannica couldn’t compete and after 244 years in print, published its last edition in 2010. The democratization of knowledge unseated the king of encyclopedias in a classic example of disruptive innovation.
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#2. Taxi Takedown: How Uber Changed Urban Transportation
Before Uber, taking a taxi was often inconvenient – having to call dispatch or wait on the curb for an available cab. When Uber launched its ride-hailing app in 2009, it disrupted the century-old taxi industry and created a new market for on-demand private driving services.
By matching available drivers with passengers instantly through its app, Uber undercut traditional taxi services with lower fares and greater convenience. Adding features like ride-sharing and driver ratings continually improved the user experience. Uber’s innovative platform rapidly scaled, offering rides in over 900 cities globally today. Who can ignore the influence of disruptive innovation examples like that?
#3. Bookstore Boogaloo: Amazon Rewrites the Rules of Retail
Disruptive innovation examples like Amazon have been be hot topic for many years. Amazon’s disruptive innovations revolutionized how people buy and read books. As online shopping gained traction in the 1990s, Amazon positioned itself as Earth’s biggest bookstore. Its website made browsing inventory and ordering convenient 24/7. Extensive selection and discounted pricing beat out brick-and-mortar bookstores.
When Amazon released the first Kindle e-reader in 2007, it disrupted book sales again by popularizing digital books. Traditional bookstores like Borders and Barnes & Noble struggled to keep pace with Amazon’s omnichannel retail innovation. Now, nearly 50% of all books are sold on Amazon today. Its disruptive strategy redefined retail and publishing.
#4. Creative Destruction: How Digital News Dethroned Print Journalism
The internet birthed the biggest disruption to newspapers since the invention of movable type. Established publications like The Boston Globe and Chicago Tribune dominated the printed news landscape for decades. But starting in the 2000s, digital-native news outlets like Buzzfeed, HuffPost, and Vox gained readers with free online content, viral social media, and targeted mobile delivery.
At the same time, Craigslist disrupted print newspapers’ cash cow – classified ads. With circulation plummeting, print advertising revenue collapsed. Many storied papers folded while survivors cut print operations. The ascendance of on-demand digital news dismantled the traditional newspaper model in a stark example of disruptive innovation.
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#5. Mobile Makes a Call: Why Apple’s iPhone Trounced Flip Phones
It is one of the most brilliant disruptive innovation examples. When Apple’s iPhone launched in 2007, it revolutionized the mobile phone by condensing a music player, web browser, GPS, and more into a single intuitive touchscreen device. While popular ‘flip phones’ focused on calls, texting, and snapshots, the iPhone delivered a robust mobile computing platform and iconic design.
This disruptive ‘smartphone’ overhauled user expectations. Competitors like Nokia and Motorola struggled playing catch up. The iPhone’s runaway success catalyzed the mobile app economy and ubiquitous mobile internet use. Apple is now the world’s most valuable company thanks largely to this mobile disruption driven by innovative technology.
#6. Banking Breakthrough: How Fintech Is Disintermediating Finance
Disruptive fintech (financial technology) upstarts are challenging traditional banks. Startups like Square and Stripe simplified credit card processing. Robinhood made stock trading free. Betterment and Wealthfront automated investment management. Other innovations like crowdfunding, crypto-currency, and pay-by-phone reduced friction in payments, loans, and fundraising.
Incumbent banks now face disintermediation – losing customers directly to fintech disruptors. To stay relevant, banks are acquiring fintech startups, forming partnerships, and developing their own mobile apps and virtual assistants. Fintech disruption increased competition and financial accessibility in a classic disruptive innovation example.
#7. The Rise of AI: ChatGPT and How AI Disrupts Industries
Together with the Internet of Things (IoT), blockchain, and several others, Artificial intelligence (AI) is considered to be the most disruptive technology and has impacted numerous sectors. There is increasing controversy and concern about the pros and cons of AI. Nothing can prevent it from changing the world and the way humans live. “AI may have flaws, but human reasoning is deeply flawed, too”. Therefore, “Clearly AI is going to win,” Kahneman remarked in 2021.
The introduction of ChatGPT by its developer, OpenAI at the end of 2022 remarked a new technological leap, leading to a race of AI development in other corporations with a surge of investment. But ChatGPT isn’t the only AI tool that appears to do specific tasks better and quicker than humans. And it is expected that AI will continue to make significant contributions to various fields, especially healthcare.
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What’s Next: The Upcoming Wave of Disruptive Innovation
Disruptive innovation never stops. Here are emerging technologies that could spark the next revolution:
- Cryptocurrencies like Bitcoin promise decentralized finance.
- Quantum computing would exponentially increase processing power for cryptography, machine learning, and more.
- Commercial space travel could open up new industries in tourism, manufacturing, and resources.
- Brain-computer interfaces and neurotechnology may enable profound new applications.
- AR/VR could transform entertainment, communication, education, medicine, and beyond through disruptive innovations.
- The dramatic development of AI and Robots and their threat to the future of work.
The lesson? Ingenuity powers disruption. Companies must foster a culture of innovation and flexibility to ride each wave or risk getting swallowed in the storm. But for consumers, disruptive innovation puts more power, convenience, and possibilities in their pocket. The future looks bright and disruptive thanks to these examples of game-changing innovations.
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It is vital to be ready to welcome and adapt to ongoing disruptive innovation. Who knows you might be the next disruptive innovator.
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Frequently Asked Questions
Is Netflix a disruptive innovation?
Yes, Netflix’s streaming model was a disruptive innovation that shook up the video rental industry and television broadcasting through new internet technology and business models.
What is the best example of a disruptive technology?
Top examples of disruptive technology innovations are the iPhone disrupting mobile phones, Netflix disrupting video and TV, Amazon disrupting retail, Wikipedia disrupting encyclopedias, and Uber’s platform disrupting taxis.
Is Tesla an example of disruptive innovation?
Yes, Tesla’s electric vehicles were a disruptive innovation that disrupted the gas-powered auto industry. Tesla’s direct sales model was also disruptive to traditional auto dealership networks.
How is Amazon an example of disruptive innovation?
Amazon leveraged online retail as a disruptive innovation to shake up bookstores and other industries. Kindle e-readers disrupted publishing, Amazon Web Services disrupted enterprise IT infrastructure, and Alexa disrupted consumers through voice assistants – making Amazon a serial disruptive innovator.
Ref: HBS Online |