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The Fallacy of ‘Disruptive Innovation’ - The Experts - WSJ
Nov 6, 2014 | WSJ | by Karl Ulrich,vice dean of innovation and CIBC professor of entrepreneurship and e-commerce at the University of Pennsylvania’s Wharton School.

Disrupt is perhaps the most misused term in entrepreneurship.

Successful new companies can indeed disrupt an industry. Amazon disrupted book retailing. Its ascent caused the failure of the incumbent Borders.

Two conditions are required for disruption.

First, a substantial fraction of the market must prefer the product or service of the new company.

Second, the incumbents must be unable to respond and replicate. When those conditions are met, a new entrant can gain sufficient market share that existing firms fade into irrelevance.

But disruption is rare, and it’s not required for entrepreneurial success....listen to the elevator pitch of essentially any startup in a business plan competition and the template is mind-numbingly standard: [ new company ] will disrupt the [ established industry ] by [ new company technology or business model ].

Yet, most of them will not.

If they are successful, they will find an underserved market segment, deliver a great product, garner some share, and achieve positive cash flow.

That’s a great outcome that will result in the creation of value. It is not disruption.
disruption  innovation  start_ups  Amazon  cash_flows  underserved  booksellers  incumbents  fallacies_follies 
november 2014 by jerryking
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