Why Disruptive Innovation Creates More Than A Cheap Price Tag

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How can you spot a disrupter in the marketplace? The first indication is a lower price tag for a product or solution.

’What disruptive innovations do is, they lower your cost. They lower the cost of the product to the point where more people can afford it and more people can access it,’ said Spencer Nam, senior research fellow at the Clayton Christensen Institute for Disruptive Innovation.

But Nam, who spoke from previous experience on Wall Street and at Bain & Co., said disrupting a market is about more than making a good or service more affordable.

’Not only [does] it make it cheaper, but it also creates a mass adaption of the solution across all types of customers,’ he said.

That means the disrupter turns individuals who previously couldn’t access a solution into customers. Therefore, according to Nam, adisruptive innovationhas ’significant implications’ for an existing marketplace, and furthermore, ’it can create new markets.’

For example, Uber disrupted the existing taxi/transportation market, while the iPod created an entirely new market.

’Also it can transform how we solve different problems in our lives,’ Nam said.

PUBLISHED AUG. 24, 2015