Disruption Theory

Clay Christensen’s work on Disruption Theory, in particular his book The Innovator’s Dilemma, is said to have had a profound impact on Steve Jobs at Apple. Farnam Street has a fascinating post up with some comments he’s made recently regarding disruption as it relates to the media business…

With history as our guide, it shouldn’t be a surprise when new entrants like The Huffington Post and BuzzFeed, which began life as news aggregators, begin their march up the value network. They may have started by collecting cute pictures of cats but they are now expanding into politics, transforming from aggregators into generators of original content, and even, in the case of The Huffington Post, winning a Pulitzer Prize for its reporting.

They are classic disruptors.

Disruption theory argues that a consistent pattern repeats itself from industry to industry. New entrants to a field establish a foothold at the low end and move up the value network—eating away at the customer base of incumbents—by using a scalable advantage and typically entering the market with a lower-margin profit formula.

It happened with Japanese automakers: They started with cheap subcompacts that were widely considered a joke. Now they make Lexuses that challenge the best of what Europe can offer.

Keep Reading:

Mastering the art of disruptive innovation in journalism (Farnam Street)