The theory of disruptive innovation (or technology) was first coined by Harvard professor Clayton M. Christensen in his research on the disk-drive industry, and later popularized by his book The Innovator’s Dilemma, published in 1997.
This theory explained the phenomenon by which a certain new method, idea or product based on a whole new framework or paradigm fundamentally transformed the existing market or sector by introducing something (e.g., more simplicity, convenience, accessibility, affordability, etc.) that unexpectedly attracted customers who previously embraced the existing method, idea or product. Hence, the word “disruptive” was applied as a qualifier to the technology.
Yet, not all customers embraced this disruptive technology simultaneously. Everett Rogers identified five unique “personas” (customer types) in his 1962 book Diffusion of Innovations who tend to adopt disruptive technology at different times across 5 phases of a life cycle (“TALC”): Innovators, Early Adopters, Early Majority, Late Majority, and Laggards based on their respective threshold or tolerance for risk/uncertainty over time.
Innovators (2.5%): Innovators are the first individuals to adopt an innovation. Innovators are willing to take risks, youngest in age, have the highest social class, have great financial lucidity, very social and have closest contact to scientific sources and interaction with other innovators. Risk tolerance has them adopting technologies which may ultimately fail. Financial resources help absorb these failures.
Early Adopters (13.5%): This is the second fastest category of individuals who adopt an innovation. These individuals have the highest degree of opinion leadership among the other adopter categories. Early adopters are typically younger in age, have a higher social status, have more financial lucidity, advanced education and are more socially forward than late adopters. Early adopters are more discrete in adoption choices than innovators. Realize judicious choice of adoption will help them maintain central communication position.
Early Majority (34%): Individuals in this category adopt an innovation after a varying degree of time. This time of adoption is significantly longer than the innovators and early adopters. Early Majority tend to be slower in the adoption process, have above average social status, contact with early adopters and seldom hold positions of opinion leadership in a system.
Late Majority (34%): Individuals in this category will adopt an innovation after the average member of the society. These individuals approach an innovation with a high degree of skepticism and after the majority of society has adopted the innovation. Late Majority are typically skeptical about an innovation, have below average social status, carry very little financial lucidity, are in contact with others in late majority and early majority, and possess very little opinion leadership.
Laggards (16%): Individuals in this category are the last to adopt an innovation. Unlike some of the previous categories, individuals in this category show little to no opinion leadership. These individuals typically have an aversion to change-agents and tend to be advanced in age. Laggards typically tend to be focused on “traditions”, likely to have lowest social status, lowest financial fluidity, be oldest of all other adopters, are in contact with only family and close friends, and possess very little to no opinion leadership.
In 1991, Geoffrey Moore published the 1st edition of his landmark marketing book Crossing the Chasm (revised in 1999 and again in 2014) with real-world examples of Rogers “TALC” research model in adopting disruptive technology with a significant revision: He asserted that a chasm or “gap” existed between the early adopters of the product (the technology enthusiasts and visionaries) and the early majority (the pragmatists).
Moore believed that enthusiasts/visionaries (Innovators and Early Adopters) and pragmatists (Early Majority, Late Majority, and Laggards) had very different expectations—and he attempted to explore those differences and identify techniques to successfully overcome the challenges of crossing the “chasm” including choosing a target market, understanding the whole product concept, positioning the product, building a marketing strategy, choosing the most appropriate distribution channel and pricing.
A classic example of disruptive technology in the 20th century was the personal computer (originally called the “microcomputer”) in the late 1970s and early 1980s.
I recall that, in 1985, I decided to take a chance and purchased a 2X “turn-key system” manufactured by Kaypro for about $750 that included:
- A 9” (diagonal) monochrome monitor (green)
- Two 64K floppy-disk drives
- Embedded in a CPU running CPM-86 as an operating system
- Three software applications (WordStar, DataStar, and MailMerge)
- A full-function, daisy-wheel printer with a serial interface cable.
I believe I was an “Innovator” back then because I was willing to the “chance” on the disruptive innovation even though it was still evolving. The chance I took was that the Kaypro’s cheaper CPM-86 operating system would eventually end up becoming a “standard” for microcomputers. But, alas, it did not and I turned out to be wrong.
Instead, the more expensive but comprehensive IBM PC-DOS based on the IBM Personal Computer (XT and AT) prevailed. So, by 1988, I sold my Kaypro 2X turn-key system at a yard-sale for $350 so that I could purchase an IBM-compatible “knock-off” (without the software and the printer) for $1,000 that used PC-DOS and had 512K RAM, a single floppy drive and a hard-disk that held 1 Meg of peripheral storage. Wow, now THAT was disruptive technology back then! Yet, what had been “disruptive” in 1985 had quickly became “blasé” by 1988!
Disruptive Technology: What is it?
A disruptive technology is one that displaces an established technology and shakes up the industry or a ground-breaking product that creates a completely new industry. Disruptive technology lacks refinement, often has performance problems because it is new, appeals to a limited audience and may not yet have a proven practical application.
What is the importance of Disruptive Technology?
Large corporations have trouble capitalizing on the potential efficiencies, cost-savings or new marketing opportunities created by low-margin disruptive technologies. It is not unusual for a big corporation to dismiss the value of a disruptive technology because it does not reinforce current company goals—only to be blindsided as the technology matures, gains a larger audience and market share and threatens the status quo.
Uber & Lyft disrupted taxis and has caused cities to consider outlawing them to protect taxis. Taxis in NYC took over a year to get their own app.
Airbnb disrupted the hotel industry. For about the same price as a hotel, you can rent a whole apartment or house for a weekend, week or season rather than stay in a room.
Square, Go Payment and others have disrupted the banking industry demand for small businesses to use merchant accounts.
William S. Ruggles is a member of the MRC Technology Committee. He is COO and Managing Partner of Ruggles2 LLC, a management consulting firm specializing in continuous performance improvement for medium and large organizations, both for-profit and nonprofit. Previously, he was an Adjunct Professor at Stevens Institute of Technology in Hoboken and the Deputy Chief Technology Officer for Workforce Enhancement for the State of New Jersey in Trenton. He can be reached at email@example.com.
Nina R. Johnson is Co-Founder at Singularity LLC, which strengthens, grows, and secures businesses with technology. She attended Stevens Institute of Technology and New Jersey City University and her areas of expertise are social media, website design, marketing, networking and technology solutions.