Understanding disruptive innovation and sustaining innovation

Innovation is critical for long-term business success, particularly if you’re an entrepreneur. This means companies have to come up with new ideas or improve current ideas in ways that make customers’ lives easier. This might take the form of a new product, a service or even a new way of looking at an old problem.

In his work The Innovator’s Dilemma, professor Clayton Christensen underlines the importance of improvement by identifying how a company can fail even if it does all the right things. Sustaining innovations — technologies that improve performance — can fail when disruptive innovations offer more affordable or creative solutions.

What is sustaining innovation?

An example of sustaining innovation is a product that provides a more satisfying customer experience than previous products and improves product performance. This occurs when companies create products that outperform the competition in their market. The product’s vendor achieves higher profits as customers recognize the product’s value.

Sustaining innovations are often built gradually, such as when products grow more effective to meet customer demands. For example, customers might request that companies add a new feature to an existing product. In other cases, companies might proactively develop a product based on their assumptions about what their customers might find useful.

A sustaining innovation represents the natural progression of a product as it generally becomes more useful for customers, thereby prolonging the product’s life span in the market.

Examples of sustaining innovation

Sustaining innovation exists wherever companies improve products to satisfy customer requests or to keep pace with competitors. Here are a few notable examples:

• Added smartphone features like better cameras, increased battery life, larger screens and enhanced processing power
• Automotive features like remote start or self-parking
• Credit card features like cash-back options, airline miles and points for grocery purchases

Many sustaining innovations don’t represent a complete overhaul of a product or service. Instead, they’re often controlled changes meant to improve the consumer experience in a specific way. While they won’t create an entirely new market, sustaining innovations help solidify a company’s standing in a particular industry.

What is disruptive innovation?

Unlike a sustaining innovation, a disruptive innovation offers a product, service or business model to a niche market that has been overlooked. Although disruptive innovation isn’t always for niche markets, whichever market it’s in, it’s meant to reset industries through solutions that are impactful for customers, resulting in a competitive advantage. Often, companies become disruptors by creating entirely new products, or a more cost-effective approach, by repurposing old technologies.

In many cases, disruptive technology also makes an existing product or service available to a new market. It might reduce the cost of a traditionally expensive item, for instance, allowing more people to enjoy it.

Examples of disruptive innovation

More than anything, disruptive innovations can render previously successful companies obsolete by offering a new product or way of doing things. Here are some examples:

• A popular streaming service popularized the at-home movie rental model for the mainstream market, which took a substantial chunk of the market from movie theaters and made video rental stores a thing of the past.
• A company that allowed people to rent out their homes offered travelers a cheaper option for lodging while simultaneously allowing homeowners to profit in a traditionally hotel-led hospitality space.
• One company, originally launched as an online bookstore, quickly devalued physical storefronts and changed how all products (not just books) were sold and purchased around the world.
• A popular music streaming company changed the music industry, offering mainstream customers unlimited licensed music for a flat fee, which was a clear upgrade over per-song purchases.

These and other disruptive innovations did more than add on to an existing popular product. They changed the way entire markets operated, allowing customers to experience products or services in a new way.

The role of technology in disruptive innovation

Disruptive vs. sustaining innovation

Disruptive innovations don’t overwhelm markets the moment they’re introduced. On day one, a potential disruption can actually result in worse overall market performance, since it’s a cheaper version of an existing product. However, with improved reception and adaptation, disruptions can replace sustaining innovations entirely.

To preserve any remaining market share, sustaining innovators are forced to rethink their business model. Companies that sell sustaining innovations might restrict their target market to focus on their most loyal customers only. They might also attempt to make further changes to their products — in ways that mimic some of the best features of the now-popular disruption.

Sustaining innovators that fail to compete with disruptive innovation may face a quick exit from the market. For example, a popular movie rental corporation with brick-and-mortar storefronts famously was late to adapt to DVDs by mail and, later, streaming. By the time executives realized how much their core market had changed, profits had fallen too steeply to recover.

How to develop a disruptive business model

Business and data science at University of Phoenix

If you’re looking to learn more about online business programs or data science degrees that prepare students with skills for a variety of career paths, consider a degree at University of Phoenix. Whether you’re looking to build fundamental knowledge or advance your skill set, there are plenty of degrees and certificates to consider.

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