Exponential Growth in Product Performance and Its Implications for Disruptive Innovation Theory

Exponential Growth in Product Performance and Its Implications for Disruptive Innovation Theory

This research studies the theory of disruptive innovation. It identifies the strengths and weaknesses of the theory and focuses on the concept of product performance as an incomplete notion that needs further study. This research uses quantitative and qualitative evidence from the disk drive industry, the semiconductor industry, and the personal and mobile computing industries to test Clayton Christensen’s disruption theory, which is the main theory proposed today as an explanation of disruption. To understand the phenomenon of over-serving customer needs, this study analyzed the curves of performance improvement in disk drives, semiconductors, and personal and mobile computing devices from 1974 to 2015. Further historical analysis was used to contextualize the data and to explain the implications that performance improvements had on use and customer value. The main finding of this research was identifying that the rate of improvement of a technology’s performance is not often faster than the rate at which customer needs increase over time. Instead, both curves adapt to each other as companies adjust their offer and as innovations transform performance gains into customer value. This finding contradicts a key hypothesis of disruption theory. To account for these results, this study used the notion of elasticity and coined a new concept: “elasticity of customer needs,” which describes the responsiveness of the performance demanded by customers to a change in the performance offered by companies, especially when new value is created. This concept furthers the understanding of performance and complements the theory of disruptive innovation.