Monthly Archives: October 2010

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Some definitions around innovation

Disruptive technology has been one of my main research areas for my first term of graduate school.  Disruptive innovation is an interesting and fairly new concept introduced by Dr. Clayton Christensen, a well-known MBA professor at the Harvard Business School.  In order to understand disruptive technology fully, I studied the categorization of a technology/innovation.  Here are some definitions I found from my research on innovation.

An innovation is either sustaining or disruptive to our society.  According to Clayton Christensen and Michael Raynor in their book, The Innovator’s Solution, “a sustaining innovation targets demanding, high-end customers with better performance than what was previously available.  Some sustaining innovation are the incremental year-by-year improvements that all good companies grind out.  Other sustaining innovations are breakthrough, leapfrog-beyond-the-competition products.  It doesn’t matter how technologically difficult the innovation is, however: The established competitors almost always win the battles of sustaining technology.  Because this strategy entails making a better product that they can sell for higher profit margins to their best customers, the established competitors have powerful motivations to fight sustaining battles.  And they have the resources to win.”  Within sustaining innovation, there are revolutionary and evolutionary innovations.  A revolutionary innovation creates a new market that by allowing customers to solve a problem in a radically new way, while an evolutionary innovation improves a product in an existing market in ways that customers are expecting. Automobiles were a type of revolutionary innovation in the transportation industry improving the traditional horse carriage or rail road types of transporting methods.  When fuel-injected engines came out, it created an evolutionary effect in the automobile industry.  A fuel injection system increases engine fuel efficiency and produces more power than a carbureted engine, therefore, it is an evolutionary innovation.

“Disruptive innovations, in contrast, don’t attempt to bring better products to established customers in existing markets.  Rather, they disrupt and redefine that trajectory by introducing products and services that are not as good as currently available products.  But disruptive technologies offer other benefits – typically, they are simpler, more convenient, and less expensive products that appeal to new or less-demanding customers.” (The Innovator’s Solution, p. 34, 2003)  Disruptive technology can hurt successful, well managed companies that are responsive to their customers and have excellent research and development.  Within disruptive innovation, Dr. Christensen distinguishes between low-end disruption, which targets customers who do not need the full performance valued by customers at the high end of the market, and new-market disruption, which targets customers who have needs that previously unserved by existing incumbents.  Some of the low-end disruption examples include downloadable digital media disrupts the CD and DVD market, digital cameras disrupt the film-based cameras, and plastic products disrupt the metal, wood and glass wares.  The Linux OS is the perfect example as a new-market disruptive innovation.  When the Linux OS was first introduced in 1991, it was inferior in performance to other server operating systems like Unix and Windows NT.  However, it was inexpensive compared to other server operating systems.  After years of improvements, Linux is now installed in 87.8% of the worlds 500 fastest supercomputers.

In health care, there are many disruptive technologies such as smart cards, RFID, remote monitoring, wearable computing, personal health records, genomics, bio sensing, bio informatics, etc.  My current research is on the disruptive impacts of smart card technology in health care.  Knowing the types of innovations after the previous discussion I now appreciate the fact that smart card technology should be categorized as a new-market disruption in health care.  Understanding and distinguishing the difference between various types of innovations is critical for my research.

Reference:
* http://en.wikipedia.org/wiki/Disruptive_technology
* http://en.wikipedia.org/wiki/Fuel_injection
* Christensen, Clayton M., Raynor, Michael E. (2003). The Innovator’s Solution.

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