I used to use the term “disruptive innovation” as a synonym for “new technology”, until I recently watched a YouTube video by Prof. Christian Rieck, where he explains the difference between sustainable innovation and disruptive innovation.

He recorded the video as an obituary to Clayton Christensen, who defined and elaborated the concept of disruptive innovation in his book “The innovator’s dilemma” from 1997.

I really recommend watching the original, but since it is in German I’ll summarize the core of the core takeaway from that video:

disruptive innovation comes with product deterioration (sic!)

If this is clear to you, you’re done here. If not, see why:

There are two major points that make an innovation disruptive. On the one hand, it is technologically different (mostly simpler), on the other hand it comes with a deterioration of the product. In contrast sustainable innovations are evolutions or revolutions of a product, which keep the business model in place.

The example used in the video is the CD as the successor to the vinyl record. The CD is revolutionary compared to vinyl. It is smaller and provides better sound quality on most hardware. It is a sustainable innovation, because nearly the whole production and distribution system, the business model stayed the same.

The input for a CD is still around 60 minutes of music and cover art. It must be produced in batches in factories, then distributed around the world. Furthermore, stores are needed to sell them. All that stuff was already in place for the vinyl record.

The MP3 is technologically simpler. It is just a file codec and record companies could have easily implemented it from a technological standpoint of view. But with the MP3 the whole logistics behind the production and distribution of the music would have collapsed. It was not necessary to provide cover art, to produce a hardware token in a factory, to transport it to stores and sell it there.

And most importantly the MP3 contained a product deterioration. The sound quality of a MP3 was much worse and the handling of them needs computer skills. Even if record companies would have been willing to cut off old braids, they would have had to do it for a product with worse sound quality and usability.

Disruptive technology is a technology that companies
cannot defend against without destroying their traditional market.

There are many more examples: Blackberry, Nokia, Kodak and hopefully not Tesla. Each time the “new kid” came around with a simpler and worse solution, leaving the “top dog” unable to defend itself against a product, which is actually worse than the own one.