The rapidly changing global economic environment, productivity growth and social development are heavily dependent on sustainable industrial advancement and technological process. Introduction of new products is directly associated with market performance and industrial development. Innovation is, therefore, a key factor in mobilizing both demand pull and technology push in industries and affecting the rate of entry, survival and growth of firms (Tidd and Bessant, 2013). Innovation can be defined as the ability, application and exploitation of new or updated ideas to the products or processes to increase or create value to customers and firms (Sullivan and Dooley, 2008).
When considering industrial innovation, the pace of technological process defeats the market demand growth for highly effective technologies where incumbents over-serve the market by manufacturing more advanced products exceeding the consumer needs that leaves a gap at lower line of the market between what is demanded and what can be provided, opening a path for entrants at the bottom line segment (Markman and Waldron, 2014). Disruptive innovations typically have a significant impact on a certain industry or market with a novelty mix of attributes that might appeal to those customers near the bottom-line of the market (Christensen et al., 2016). Generally, companies pursue sustainable innovation at higher market segments to generate profits.
But this paves a way for disruptive innovation which might not seem attractive at first glance when compared against traditional performance metrics but if pursued and adopted by the consumers, it can completely transform the traditional methods performed by the incumbents (King and Baatartogtokh, 2015).The term disruptive innovation is adapted from Christensen’s seminal work ‘The Innovator’s Dilemma’ where he linked his observation to the concept of technology S-curve life cycles and value network. He claims that disruptive technology appears in the early phase of the life-cycle challenging the existing products as the marginal utility of further improvements in the traditional practices goes down.
Often incumbents focus more on current demand to the extent of over-achieving. In the retrospect, disruptive technology starts gaining a foothold when entrants strike other segments which are generally overlooked by the incumbents (Christensen et al., 2016). Thus, many industries are being disrupted majorly through new technologies and business models, leading to fulfilling the needs of customers in a different perspective.