Disruption is a useful concept in strategic foresight because technical inventiveness and economic ingenuity are not enough on their own to guarantee the success of an innovation. Research indicates that innovation must relate to the existing business landscape in a specific way (the meaning of the word innovation as used here is the conversion of technical or other inventiveness into successful business).
According to evidence-based research into business success (C M Christensen & M E Raynor, The Innovator’s Solution. HBS Press, 2003), there are two broad types of innovation: ‘sustaining’ and ‘disruptive.’ Sustaining innovation supports an existing business, while disruptive innovation challenges the existing industry structure. Sustaining innovation may be achieved either by year on year incremental improvements, or by a breakthrough that leapfrogs beyond the competition.
Disruptive innovations can be one of two types: ‘low-end,’ or ‘new market.’ Low-end innovation offers basic but adequate performance at the low end of mainstream markets, while new-market innovation may have lower traditional performance than mainstream offerings, but better performance in new attributes such as simplicity and convenience. For each of these types there is a corresponding product performance level, customer or market niche, and business model implication.
Each of the three types of innovation is intended to serve a different type of customer. Low-end disruptions are intended for ‘over-served’ customers at the low end of existing markets. New-market disruptions address ‘non-consumption’ by potential customers who are unable to afford or use existing products. Sustaining innovation is intended for the most demanding and profitable existing customers, who are willing to pay for improved performance.