Michael L. Collard, Ph.D.

Department of Computer Science, The University of Akron


Disruptive Innovation

the process in which a smaller company, usually with fewer resources, can challenge an established business (often called an “incumbent”) by entering at the bottom of the market and continuing to move up-market.

  • Incumbent businesses innovate and develop their products or services to appeal to their most demanding and profitable customers, ignoring the needs of those downmarket.
  • Entrants target this ignored market segment and gain traction by meeting their needs at a reduced cost compared to what the incumbent offers.
  • Incumbents don’t respond to the new entrant, focusing on their more profitable segments.
  • Entrants eventually move upmarket by offering solutions that appeal to the incumbent’s “mainstream” customers.
  • Disruption has occurred once the new entrant has begun to attract the incumbent business’s mainstream customers en masse.

Historical Examples of Disruption

  • Telecommunication Mobile phones disrupting landline phones.
  • Music Transition from buying physical to digital music. Streaming music platforms replacing music purchases.
  • Photography Digital photography's rise led to the decline of film-based systems (e.g., Kodak).
  • Automotive Japanese cars gaining significant market share over American-made cars.
  • Data Storage Small hard drives displacing large hard drives.

Key Characteristics of Disruptions

  • Often involve technological advancements.
  • While disruptive innovation typically leverages software or computer-based components, they are not always explicitly high-tech.

Types of Changes

  • sustaining technology
  • Things get faster and faster, cheaper and cheaper
  • disruptive technology
  • Things get replaced

Sustaining Technology

iterative improvements that primarily bolster the existing market dynamics and do not radically change them

  • x86 chips get faster and faster
  • SSD drives replacing hard drives
  • Cars get better and better MPG
  • Evolution from Gasoline -> Diesel -> Hybrid cars
  • These are not disruptive; they support the status quo

Disruptive Technology

Introduces a paradigm shift, leading to the replacement of the old with the new.

Summary of Lehman's Laws

Incorrect Reason for Disruption

Firms fail because they cannot keep up with changing technology

  • Not the case
  • Disrupted industries often lead in the technology that disrupts them
  • Good business practices result in avoiding changes needed to meet disruption
  • Current company structure cannot make money in the new environment

Low-End Disruption (Start)

  • Disruptive product is introduced
  • Much cheaper and much more convenient
  • Not perceived as high quality
  • Greatly criticized

Low-End Disruption (Finish)

  • Product gets good enough
  • Replaces original category
  • Original company is disrupted

How Does Software Fit In?

  • Disruptive companies often have a more agile process
  • In many companies, software (and more) has left the Evolution lifestage
  • In high-tech (software, hardware) move to more interesting jobs


  • Self-Disruption Organizations and individuals need to innovate proactively, even if it means cannibalizing their existing products or services
  • Continuous Learning Must constantly improve, even if uncomfortable