Disruptive Innovation

Christensen's theory that established companies are often undermined not by better technologies but by simpler, cheaper innovations that initially serve low-end or non-consuming markets, then improve to displace incumbents.

The innovator's dilemma: rational decisions by incumbent managers — listening to profitable customers, pursuing better margins — leave them vulnerable to disruptive entrants. Disruptive trajectory: disruptors enter at the low end (worse on traditional metrics, but cheaper/simpler) → improve along a trajectory → overshoot mainstream customers' needs → incumbents' high-end customers become irrelevant. Two types: low-end disruption (same market, lower price) and new-market disruption (create new consumption). Widely misapplied but theoretically precise.