Define disruptive innovation and how it leads to the innovator's dilemma
What will be an ideal response?
Disruptive innovations are new technologies, products, or services that eventually surpass the existing dominant technology or product in a market. Within every market, there are customers who have relatively high, moderate, or low performance requirements from the existing product offerings. Over time, as disruptive innovations and incremental improvements are introduced into an industry, the capabilities of the products in all segments (i.e., low to high performance) improve; as product capabilities improve at the high-performance end of the market, the number of potential customers for these products gets relatively smaller. At the same time, as the low-end products also improve, they are increasingly able to capture more and more of the mainstream marketplace.
These developments caused by disruptive innovations, typically ignored by established market leaders, lead to loss of their market dominance and hence lead to market failure. This is given by a term known as innovator's dilemma.
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