BUS700B_S2024

ASSIGNMENT

“DISRUPTIVE INNOVATION”

ASSIGNMENT BRIEF

1. What is disruptive innovation

When Clayton M. Christensen first presented the term “disruptive innovation”

in a 1995 paper for Harvard Business School, he wasn’t just speaking of
breakthrough innovations that make good products better.

Innovations are constantly occurring in every industry, but to be disruptive an

innovation must entirely transform a product or solution that satisfies the
needs of a customer segment, that historically was so complicated only a few
people with a lot of money and skills had access to it. A disruptive innovation
is often a much more simple, low-grade solution that is more affordable and
accessible to a larger customer segment, which opens it to an entirely new
market. This often disturbs and disrupts established industries and overthrows
existing market leaders. Disruptive innovation is not the process of improving
or enhancing existing products for the same customer target group. Rather, it
involves the technologies used to make them easy to use and available to the
larger, non-targeted customers in the market.

Disruptive innovations typically start appearing at the bottom of the market,

meeting the same needs as the needs of the high-end customers in a simple
and relatively cheap way. They are usually not highly valued at first, and tend
to be seen as “low-class.” But due to their low costs and other advantages
such as being easily accessible, they move quickly up the market and
eventually become more appealing than their sophisticated competitors.

Christensen noticed that big, powerful companies at the peak of their power
are aware of the disrupters. They are usually innovating themselves. But
these established companies drive what is called “sustaining innovations,”
which are modifications and improvements on existing products or services.
They make their top-of the class products better and better to serve their most
sophisticated and demanding customers, thus increases their profit margins
the most. They are not bothered by disrupters taking a share at the bottom of
the market, because it appears too insignificant and low-profit-margin to
attract their attention.

But this oversight creates space for new players to enter the market at the
bottom, eventually climbing their way upmarket to damage or even displace
the powerful existing companies.

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2. Main characteristics of disruptive innovators

There are several attributes that distinguish true disruptive innovators:

a) Innovations and technologies that make expensive or sophisticated

products and services accessible and more affordable to a broader
customer segment in the market.

b) They are low-cost and highly accessible.

c) They have lower gross margins than their existing competitors or the
incumbents.

d) They serve a smaller low-end target market at first, before expanding

to a much bigger market due to their accessibility.

e) They are hard to see coming and are not taken seriously. They quietly,
slowly “climb the ladder” and can take years or decades to gain
competitive advantage before they dramatically disrupt the market by
displacing long-standing, established competitors.

3. Assignment Requirements

You are required to work individually to carry out the following:

a) Conduct a literature investigation into the concepts of Sustaining

versus Disruptive innovation.
- Disruptive innovation is an innovation that simplifies and
makes more affordable products and services to undesirable or
ignored markets. Established companies typically strive to
improve their products and services for their profitable customer
base, largely ignoring the needs and desires of untapped
segments. This lack of attention gives smaller companies or new
entrants ground to target this ignored population with simpler,
more affordable options.
- Sustaining innovation, on the other hand, is the process of
innovating to make existing products and services better for the
existing customer base, either based on customer or market
demands. Sustaining innovation does not target untapped or
ignored markets; rather, it's innovating to remain relevant and
competitive. For example, CD manufacturers making CDs with
the capacity to hold large volumes of music that are scratch-
resistant is sustaining innovation. A company providing
streaming services by digital downloads via the internet, making
CDs obsolete, is disruptive innovation.

b) Select an organisation from the list provided in the table below and
prepare a study on the issues listed in (i) to (viii).

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 AUTOMOTIVE INDUSSTRY

TOYOTA’s entrance into the automobile industry after the second

World War.

3D INDUSTRIAL PRINTING TECHNOLOGY

The appearance of 3D Printing Technology to construct a room,

house, building.

VIDEO STREAMING INDUSTRY

NETFLIX shifted the industry of home entertainment from DVD rental

service to online streaming.

TOURISM ACCOMMODATION

AIRBNB’s novel business model disrupted the tourism

accommodation sector.

Issues to be addressed in the study:

i. Description of the organisation and its historical evolution and
development.
ii. Details of its corporate governance policies and practices and
the organisational culture.
iii. Its vision, mission, and values, and its main strategic directions
and objectives.
iv. The main product lines and services.
v. Its geographical markets and presence.
vi. The organisation’s key performance measures that reveal its
performance and its business growth. Such measures can
include the number of employees, revenues, share price etc.
vii. Description of the main customers, strategic suppliers and
partners.
viii. Description of the business environment and the existing
competition.

Based on the information stated above, you are required to provide

justified arguments as to the reasons that qualify the organisation
under investigation a disruptive innovator.

c) Your report should be prepared as a document in word and should not

exceed 5000 words. It must be typed in a normal type and font (Arial

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 or Times New Roman, size 12, double space) and presented in an
orderly fashion. All references/ bibliography should be included at the
end of your assignment. It is compulsory to use the Harvard reference
system.

4. Assignment Submission

Your assignment report must be submitted electronically by uploading it on Blackboard

Learn, under the Contents section/ Course Assignments: “ASSIGNMENT –
BUS700B_S2024”.

The deadline for the assignment submission is 26/05//2024.

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