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The term 'Disruptive Innovation' was given in the year 1995 byClayton M. Christensen and is regarded as one of the mostinfluential and important innovations of the 21st century. Disruptive Innovation refers to the innovation which helps increating new market and value network in place of the existingmarket and value network which leads to the disruption of themarket-leading firms, alliances, and products that had alreadybeen established earlier.
Each and every innovation cannot beregarded as a disruptive innovation even if they are bringingabout change in the existing system. In accordance with the 'Theory of Disruptive Innovation'disruptive innovation has been classified into two types-"low-end disruption" and "new-market disruption." The low-enddisruption is a type of disruption which occurs when thechanges within the product take place at a higher rate than thecustomers are able to adapt to the changes made within theproduct.
The new-market disruption occurs when a newproduct emerges in the market that has not been servedearlier by any of the incumbents of the industry and which fitsitself within the new or emerging market segment. The process of disruptive innovation is considered important forbusiness leaders because of the benefits that it provides to thecustomers of the market. A disruptive innovator provides theproducts at a favorable price to its customers as well as yearsat creating a new and improvised value of his/her product bymaking additional changes in the product.
The process ofdisruptive innovation has been proven beneficial for executivesalso. The first disruptive innovation was encountered by the humanbeings in around 10, 000 BC in the Middle East, and sincethen it has continued to take place.