Disruptive innovation, network effects, platform business models and technology adoption.
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- What is disruptive innovation?
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An innovation that creates a new market and disrupts an existing one by offering a simpler, more convenient, or more affordable solution.- Who developed the theory of disruptive innovation?
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Clayton Christensen, who introduced the concept in his 1997 book The Innovator's Dilemma.- What is the Innovator's Dilemma?
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The paradox that companies following best practices in serving existing customers are vulnerable to disruption by entrants targeting underserved market segments.- Distinguish sustaining innovation from disruptive innovation.
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Sustaining innovation improves products along dimensions that existing customers already value; disruptive innovation competes on different dimensions, often at lower performance but lower cost.- What does an S-curve represent in technology adoption?
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A graph showing slow initial adoption, rapid growth in the middle phase, and plateau as market saturation approaches.- What is the technology S-curve replacement cycle?
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When a new technology begins its S-curve growth while the older technology plateaus, the new technology can displace the old one if performance gaps close enough for mainstream buyers.- What is low-end disruption?
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A disruption that starts by offering a product that overserves the mainstream market on performance and underserves it on price, then moves upmarket.- What is new market disruption?
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A disruption that creates entirely new market segments by making complex or expensive products simpler and more accessible to non-consumers.- Why do incumbents struggle to respond to disruptive threats?
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Disruptive innovations initially appear in less profitable, smaller segments; incumbents' financial incentives lie in serving high-margin core customers, so they ignore emerging threats until too late.- What is the performance dimension trap in disruption?
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Incumbents optimize for the performance dimensions that matter most to their profitable customers, leaving them blind to entrants who compete on different dimensions like simplicity or affordability.- What is a direct network effect?
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A positive externality where the value of a service to each user increases as more users join the network, such as a phone network or messaging platform.- What is an indirect network effect?
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A positive externality where the value to one user group increases as the size of a complementary user group increases, such as game developers joining a gaming console platform.- What is a two-sided network (or multi-sided platform)?
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A platform that brings together two or more interdependent user groups whose value depends on the participation and activity of other groups.- What are network externalities?
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The effects that one user's participation has on the value others receive from the network, which can be positive or negative.- What is critical mass in network platforms?
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The minimum number or proportion of users needed on a platform before positive network effects become self-reinforcing and growth accelerates.
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