What is Disruptive innovation?

 A disruptive innovation is an innovation that creates a new market and value network
and eventually disrupts an existing market and value network, displacing established
market-leading firms, products, and alliances


Disruptive innovations tend to be produced by outsiders and entrepreneurs in start
ups, rather than existing market-leading companies. The business environment of
market leaders does not allow them to pursue disruptive innovations when they first
arise, because they are not profitable enough at first and because their development
can take scarce resources away from sustaining innovations (which are needed to
compete against current competition).


A disruptive process can take longer to develop than by the conventional approach
and the risk associated to it is higher than the other more incremental or evolutionary
forms of innovations, but once it is deployed in the market, it achieves a much faster
penetration and higher degree of impact on the established markets.

What is (isn't) disruptive innovation?

 Disruption is a process, not a product or service, that occurs from the fringe to
mainstream
 Originate in low-end (less demanding customers) or new market (where none
existed) footholds
 New firms don't catch on with mainstream customers until quality catches up with
their standards
 Success is not a requirement and some business can be disruptive but fail
 New firm's business model differs significantly from incumbent
What is Disruptive Business Model?
 Disruptive business model disrupts the market by addressing to the repressed
demands, those demands which have been ignored by the leading providers and
manufacturers of the industry, and providing solutions which the current industry has
failed to deliver or is incompetent to do so.

 These business models are powered by disruptive innovation which helps them create
a new niche within an existing market or create a new market altogether by creating,
disintermediating, refining, reengineering or optimizing a product/service.

How To Develop A Disruptive Business Model?

 Disruption requires a lot of research from your end. Most of the times customers don’t
even know what they desire. You need to learn about the opportunities which the
current market players have been ignoring and work on whether the customer would
accept your solution or not.
 Once this is done, you need a strategy — a foolproof plan to outperform your
competitors. You may have gone into every stage of developing an excellent
product/service, but they are still things that you need to work on.

Example:

“Uber changed the way business owners think and work in more ways
than are instantly noticeable,” says Maria Bellissimo-Magrin, CEO of
creative marketing agency Belgrin. Here she examines what business
owners can learn from Uber’s actions.
What Uber did?
 Uber is cheaper than traditional taxis, sure, but that’s not what endeared them to millions of users.
The greatest advantage Uber had when attempting (and ultimately succeeding) to disrupt an
established market was how they looked at the market and their business model.
 What Uber did was to simplify a system that didn’t think it could or needed to change. Their strength
was understanding the modern consumer’s expectations for a market that some might say took the
customer for granted.
 The old system was oddly skewed in the favour of the supplier rather than the demander. Let’s paint
a picture of getting a cab before Uber:
 Depending on your city, you either hailed a cab (hoping they stop), called a local company you knew
or, if in a bar or unfamiliar place, asked the barkeep (or someone else) to call one for you. Now here’s
where the power transferred to the supplier because if the taxi company said the wait was 40
minutes then you waited 40 minutes or wasted 20 searching for a quicker pickup.
 And then you best hope to heaven that you had enough cash or a driver patient enough to stop at an
ATM – not always a pleasant conversation especially if you’ve been partying hard.

How it is changing us?

 Uber has also succeeded in disrupting the wider economy, not just the taxi market. During their
inception Uber looked at two problems in underutilised assets and ease of access to the traditional
taxi service and sought to apply a thoroughly modern solution.
 Uber created software that fixed the latter problem and engaged car-owners looking to make some
extra money to address the former – thus causing a huge boom in the supply and demand of gig
economy style jobs.
 The effect of ‘Uberisation’ is two-fold; firstly, it has increased people’s appetite for the sharing
economy as an alternative to traditional markets which is ironically becoming quite mainstream and
secondly, it normalised the idea of working as and hiring short-term contractors.
 Now we have people in their millions using AirBnB instead of hotels, Uber instead of taxis and
hundreds of other sharing companies from parking spaces to grocery shopping.

What it means for business?

 You might think traditional small businesses fear on-demand services that are
changing the economy as they know it but enterprise thrives on change.

 Many owners have found that disruptors are more benefit than threat as they find smart ways to
increase the bottom line by conveniently using gig contractors to reduce overheads or to cope with
flux.
 Businesses are now thinking about how they can disrupt their own markets and simplify their
propositions to their customers. So, rather than being put out of business they become their
industry’s Uber. And that shift in thinking will pay dividends as customers search for better consumer
experiences.
BUSINESS
STUDIES
ASSIGNMENT

NAME:RAHUL AGARWAL
DIV: BBA IT FY “C”
PRN: 19030122050