By University of Phoenix
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.
Learn in-demand business skills
with a Bachelor of Science in Business.
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.
Sustaining innovation exists wherever companies improve products to satisfy customer requests or to keep pace with competitors. Here are a few notable examples:
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.
read similar articles
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.
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:
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.
To qualify as disruptive, innovative products or services can be made available to new markets or offered at a lower price. Technology is critical in helping companies achieve both these goals.
Technology is often the main reason companies can reduce the cost of a particular product or service. For example, a new manufacturing process might help reduce costs, improve productivity or reduce the size of a company’s production line. These lowered costs can make certain products — once available only to higher-paying customers — now available to a much wider audience.
Many companies depend on technology for disruption. To meet new demands, technology can help companies create products at a faster rate. The right technology can also assist in marketing and distributing products and services after they have been created.
Time-saving, cost-cutting technologies are in high demand across virtually every industry. Christensen’s original definition of a disruptive innovation — those that satisfy market demand with lower costs — relies on technology from the start.
There are many organizations that no longer aim to create sustaining innovations. Instead, they search for technologies that help them lower costs, improve manufacturing and apply current products to entirely new market segments.
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.
While the business model for disruptive innovation can be successful, creating one can be challenging.
Here are some tips for creating a disruptive model that could potentially help reset your market:
These and other techniques can help your company position itself to create a disruptive innovation and maximize its market value.
read similar articles
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.
want to read more like this?
About University of Phoenix
As pioneers in online higher education since 1989, University of Phoenix is an accredited online university for working adults. We are proud to offer quality educational pathways through flexible, career-focused online degrees, certificates and professional development courses that fit into your life and options to save you time and money. Our students are supported every step of the way, including career services for life.
Let us help you take the most direct path to your future career goals. We’re ready when you are.
More than 100 online programs aligned to 300+ occupations.
Online courses and certificates
Explore professional development and earn credentials.
Ways to save
Learn ways you can save as you pursue your goals.