Disruptive Innovation – What Key Benefits Does It Provide Businesses?

Rohan Mathew

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Clayton Christensen, a Harvard Business School professor, coined the term ‘disruptive innovation’ in 1997. It referred to all those innovative ideas that found acceptance on the market’s outskirts but expanded into the mainstream with time. Gradually, it became an entire business model and took up a significant market share. Soon it was threatening the already existing traditional means of doing business. So disruptive innovation was acting as a catalyst for change in market dynamics. 

If we see the period when this concept surfaced, we find an apparent correlation. The era around the late 90s and early 2000s was the transition time. Not just the business domains but the entire world was seeing an unprecedented transformation to the modern world. Additionally, telecommunication, the internet, AI, machine learning, and computing advancements were on the high rise during that time. For example, the launch of the iPhone in 2007 established the pinnacle of disruptive innovation. 

The innovation-driven approach made its way through all the domains of business. The traditional marketing gimmicks transformed into digital platforms. The financial analysis also came out of big spreadsheets to creative dashboards and portals. Traditional personnel management became advanced human resource management. In short, all operational functionalities of businesses have gained significant disruptive interventions. 

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However, not every innovation is the right one for your business. You must carefully analyze your options and adopt the most befitting one. This article discusses five key benefits of disruptive innovation. It will help you to gain a better understanding of the pros and cons of disruptive innovation. 

  • Businesses engaging with technology

There was a time when technology and business were two entirely separate domains. Now we even have technology management MBA degrees due to increased technological applications and its demand in business. According to KPMG, 44% of global companies plan to increase investment in technology in 2020. The number went up by 38% in 2019. Technology has not just provided automation for manufacturing processes but has also produced new service avenues. 

Different organizations have revamped their entire business infrastructure. The most significant key benefit this innovative disruption has provided is reduced consumption of time for producing the same results. Where traditional shipping used to take days, now companies deliver within hours. Even international shipping has come within a 24-hour window. This innovation has made organizations more active and responsive. Undoubtedly, data-driven decision-making saves them from several pitfalls. 

  • Catering to low-end as well as new-market customers

Businesses tend to become narrow in their vision to cover the market. Disruptive innovation provides you the right competence to target these untapped market spaces. You can either explore new markets or serve a neglected segment of the consumer market. It generates suitable options that equip your business with the right tools to expand its market reach.

There are two distinct originations of disruptive innovation; low-end and new-market innovation. Low-end innovation focuses on the less demanding market segment. Leading marketers tend to ignore their needs since they are not in the mainstream. Airbnb can be an example of such innovation. It targeted low-end customers who required an average stay for some hours instead of five-star luxury hotels. 

New-market innovation develops an entirely new market and explores new possibilities. This disruptive innovation fulfills some unmet needs of the customers. The best example in contemporary times can be personal protective equipment (PPE) and the latest innovative masks. The widespread COVID-19 pandemic provided width for new-market creation. Now we even have robots sanitizing people’s hands in Japan. 

A key benefit of disruptive innovation is its approach to businesses for meeting a wide array of market segments. 

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  • Creating a Team of Forward-Thinking Leaders

One of the leading advantages of disruptive innovation is how it transforms your leadership and workforce. Innovation and creativity are all about forecasting change and responding accordingly. The prerequisite for equipping to this change is developing a forward-thinking leadership. It also inculcates workforce diversity. According to McKinsey, companies with a diverse workforce are 15% more likely to outperform their competitors. 

Forward-thinking leadership creates the right organizational culture to adopt and use disruptive innovation to the company’s strength. Elon Musk exhibited his forward-thinking at every innovative project he has undertaken. From Tesla to SpaceX, the entire workforce is composed of innovative and creative individuals. Hence, both organizations have produced unprecedented results as well. No one even comes near to Tesla in the electric car market. The apparent dominance became possible only because of the forward-thinking attitude of Elon Musk and his teams. They ended up adding yet another disruptive innovation to the market.

  • Providing your business sustainability

According to Forbes, 90% of startups fail, 50% barely make it to their fifth year, and only 33% to the tenth. However, Facebook started in a dormitory and has become a billion-dollar business. Amazon was initially a bookseller and now is the biggest e-commerce platform. Netflix started as a rudimentary rent-by-mail DVD service and now is the most popular content creator with $25 billion of annual revenue. All these startups could progress their business with sustainability mainly because they respected and incorporated disruptive innovation.

Your business needs to be receptive to changing customer needs. Technological advancements govern these needs. Therefore, innovating your business strategy parallel to these evolving market needs serves the purpose of responding to these disruptive market dynamics. 

  • Enabling better internal and external communication

A key benefit of innovation is in the domain of business communication. Just imagine what could have happened to your business if there hadn’t been online conferencing tools. This pandemic could blow your business to ashes. These innovative marvels enabled appropriate internal and external communication when the entire world went into lockdowns. 

Similarly, these tech advances have enhanced external communication with customers as well. Now businesses have the ease of communicating with customers across continents. The rapid digitization of the business world is also a brainchild of disruptive innovation. According to a survey, 77% of small and medium-sized enterprise owners believe that digital presence is essential for attracting customers. 


Nokia, Kodak, Blackberry, and blockbuster were market leaders in their industry. Now they don’t exist anywhere. They all share a common problem that resulted in their decline. They resisted innovation. They didn’t move along with the changing market demands. Therefore, innovation disrupted their entire business philosophy. If you think your business is more potent than these giants, you are welcome to try your luck to resist innovation. Otherwise, rethink your business strategy and adopt the right innovation and creativity. The modern way to move ahead goes through these disruptive innovations.