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Disruptive Innovation

proposed

Also known as: The Innovator's Dilemma · RPV (Resources, Processes, Values)

Good management of existing customers is exactly what lets simpler, cheaper entrants overtake incumbents from below.

Explains why successful firms miss disruptive threats: their resources, processes, and values are tuned to serve current high-end customers, so they cede low-end and new-market footholds to entrants who then move upmarket. Prescribes housing disruptive bets in separate units.

Core concepts

Sustaining vs Disruptive InnovationLow-End & New-Market FootholdsRPV Framework

Best when

  • A cheaper, 'good enough' competitor is appearing below you
  • You are deciding whether to defend a market or build a separate disruptive unit

Watch-outs

  • The term is widely misapplied to any novelty; the theory is specific
  • Predictive power for any single case is limited