What do Netflix and Wikipedia have in common?

They not only caused the decline of Encyclopaedias and Movie rentals but also are an example of the inevitable “The Innovators Dilemma” by Clayton Christensen. His book focuses on how successful companies are often surpassed by start-ups or small business who bring “Disruptive Innovation” against the “Sustaining Innovation.”

What is “Disruptive Innovation” and “Sustaining Innovation?”

A sustaining innovation focuses on the current needs of the customers, by improving the current product. Disruptive innovation focuses on future needs that the customer will have and is often characterized by poor features and being neglected by the current market.

Cell phones are an example of disruptive innovation. The first prototypes were unreliable and took poor photos. Cell phones are now a staple in modern society and often are an alternative to cameras.

Many large companies stay on the path of sustaining innovation, focusing and improving the quality and speed of a current product. However as history has taught, for a company to remain successful and dominant in the marketplace it must focus on the future needs of the customer.


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