What is Disruptive Technology?

Disruptive technology is an innovation that fundamentally transforms how customers, industries, or businesses work. A disruptive technology sweeps away the systems or behaviors it replaces because its characteristics are clearly superior.

Recent examples of disruptive technology include e-commerce, online news sites, ride-sharing apps, and GPS devices.

The vehicle, electricity, and television were all disruptive technology at the time.
Disruptive Technology Explained

Clayton Christensen established the concept of disruptive technology in a 1995 Harvard Business Review essay.1 Christensen expounded on the idea in his 1997 book The Innovator’s Dilemma.2 It has now become a catchphrase among startup businesses looking to produce a product with widespread appeal.

Even a firm with little resources can aim for technological disruption by inventing a completely new method of doing something. Established businesses like to focus on what they do best and make gradual improvements rather than revolutionary changes. They serve their largest and most demanding clientele.

This creates an opportunity for disruptive enterprises to target previously neglected customer segments and establish an industry footprint. Established organizations frequently lack the agility to respond rapidly to new threats. This enables innovators to move upstream over time and cannibalize larger customer segments.

The Potential for Disruptive Technology

Risk-taking businesses may identify the potential of disruptive technology in their own operations and seek out new markets where it may be integrated into their business processes. These are the “innovators” in the technology adoption lifecycle. Other companies may take a more risk-averse approach, adopting an invention only after seeing how it works for others.

Companies that fail to consider the effects of disruptive technologies risk losing market share to competitors that have found methods to integrate the technology.

Blockchain: An Example of Disruptive Technology

Blockchain, the technology that powers Bitcoin, is a decentralized distributed ledger that tracks transactions between two parties. It transfers transactions from a centralized server-based system to a transparent cryptographic network. The technology use peer-to-peer consensus to record and validate transactions, eliminating the need for manual validation.