Disruptive Technology
From
Wikipedia, the free encyclopedia
A disruptive technology
or disruptive innovation is an innovation
that improves a product or service in ways that the market does not expect,
typically by being lower priced or designed for a different set of consumers.
Disruptive innovations can be
broadly classified into low-end and new-market disruptive innovations. A
new-market disruptive innovation is often aimed at non-consumption (i.e.,
consumers who would not have used the products already on the market), whereas
a lower-end disruptive innovation is aimed at mainstream customers for whom
price is more important than quality.
Disruptive technologies are
particularly threatening to the leaders of an existing market, because they
are competition coming from an unexpected direction. A disruptive technology
can come to dominate an existing market by either filling a role in a new
market that the older technology could not fill (as cheaper, lower capacity
but smaller-sized flash
memory is doing for personal
data storage in the 2000s) or by successively moving up-market
through performance improvements until finally displacing the market
incumbents (as digital
photography has largely replaced film photography).
In contrast to "disruptive
innovation", a "sustaining" innovation does not have an effect
on existing markets. Sustaining innovations may be either
"discontinuous"[1]
(i.e. "revolutionary") or "continuous" (i.e.
"evolutionary"). Revolutionary innovations are not always
disruptive. Although the automobile was a revolutionary innovation, it is not
a disruptive innovation, because early automobiles were expensive luxury items
that did not disrupt the market for horse-drawn vehicles. The market remained
intact until the debut of the lower priced Ford Model T in 1908.
Contents
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History and usage of the term
The term disruptive
technology was coined by Clayton
M. Christensen and introduced in his 1995 article Disruptive
Technologies: Catching the Wave[2],
which he co-wrote with Joseph Bower. The article is aimed at managing
executives who make the funding/purchasing decisions in companies rather than
the research community. He describes the term further in his 1997 book The
Innovator's Dilemma[3].
In his sequel, The Innovator's Solution[4],
Christensen replaced disruptive technology with the term disruptive
innovation because he recognized that few technologies are intrinsically
disruptive or sustaining in character. It is the strategy or business model
that the technology enables that creates the disruptive impact. The concept of
disruptive technology continues a long tradition of the identification of
radical technical change in the study of innovation
by economists, and the development of tools for its management at a firm or
policy level.
The theory
How
low-end disruption occurs over time.
Christensen distinguishes
between "low-end disruption"
which targets customers who do not need the full performance valued by
customers at the high-end of the market and "new-market disruption"
which targets customers who have needs that were previously unserved by
existing incumbents.
"Low-end disruption"
occurs when the rate at which products improve exceeds the rate at which
customers can adopt the new performance. Therefore, at some point the
performance of the product overshoots the needs of certain customer segments.
At this point, a disruptive technology may enter the market and provide a
product which has lower performance than the incumbent but which exceeds the
requirements of certain segments, thereby gaining a foothold in the market.
In low-end disruption, the
disruptor is focused initially on serving the least profitable customer, who
is happy with a good enough product. This type of customer is not willing to
pay premium for enhancements in product functionality. Once the disruptor has
gained foot hold in this customer segment, it seeks to improve its profit
margin. To get higher profit margins, the disruptor needs to enter the segment
where the customer is willing to pay a little more for higher quality. To
ensure this quality in its product, the disruptor needs to innovate. The
incumbent will not do much to retain its share in a not so profitable segment,
and will move up-market and focus on its more attractive customers. After a
number of such encounters, the incumbent is squeezed into smaller markets than
it was previously serving. And then finally the disruptive technology meets
the demands of the most profitable segment and drives the established company
out of the market.
"New market
disruption" occurs when a product fits a new or emerging market segment
that is not being served by existing incumbents in the industry. The Linux
operating
system (OS) when introduced was inferior in performance to other server
operating systems like Unix
and Windows
NT. But the Linux OS is inexpensive compared to other server operating
systems. After years of improvements Linux is now installed in 87.8% of the
worlds 500 fastest supercomputers.[5]
Examples of disruptive innovations
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This article includes a list
of references, related reading or external
links, but its sources remain unclear because it lacks inline
citations. Please improve
this article by introducing more precise citations where
appropriate. (April 2009) |
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Disruptive
Innovation |
Displaced
or Marginalized technology |
Notes |
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Cable-operated
excavators |
Hydraulic
excavators were clearly innovative at the time of introduction but they
gain widespread use only decades after. However, cable-operated
excavators are still used in some cases, mainly for large excavations. |
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Mini
steel mills |
By
using mostly locally available scrap and power sources these mills can
be cost effective even though not large. |
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Traditional
publishing |
Early
desktop-publishing systems could not match high-end professional systems
in either features or quality. Nevertheless, they lowered the cost of
entry to the publishing business, and economies
of scale eventually enabled them to match, and then surpass, the
functionality of the older dedicated publishing systems. |
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originally,
instant photography, now increasingly all chemical photography |
Early
digital cameras suffered from low picture quality and resolution and
long shutter
lag. Quality and resolution are no longer major issues and shutter
lag is much less than what it used to be. The convenience of small
memory cards and portable hard drives that hold hundreds or thousands of
pictures, as well as the lack of the need to develop these pictures,
also helped. Digital cameras have a high power consumption (but several
lightweight battery packs can provide enough power for thousands of
pictures). Cameras for classic photography are stand-alone devices. In
the same manner, high-resolution digital
video recording has replaced film
stock, except for high-budget motion pictures. |
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Though
mainframes survive in a niche market which persists to this day,
minicomputers have themselves been disrupted into extinction. |
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Workstations
still exist, but are increasingly assembled from high-end personal
computer parts, to the point that the distinction is fading |
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When
first introduced, high speed CMOS sensors were less sensitive, had lower
resolution, and cameras based on them had less duration (record time).
The advantage of rapid setup time, editing in the camera, and
nearly-instantaneous review quickly eliminated 16 mm high speed
film systems. CMOS-based cameras also require less power (single phase
110 V AC and a few amps for CMOS, vs. 240 V single- or three-phase at
20-50 A for film cameras). Continuing advances have overtaken 35 mm
film and are challenging 70 mm film applications. |
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Though
early muskets had less fire rate, range, accuracy and reliability than
crossbows and longbows, firearms allowed essentially anyone to become an
effective soldier with very little training. Earlier military units like
bowmen and knights needed years of practice to master the skills. |
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The
first steamships were deployed on inland waters where sailing ships were
less effective, instead of on the higher profit margin seagoing routes.
Hence steamships originally only competed in traditional shipping lines'
"worst" markets. |
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When
Western
Union infamously declined to purchase Alexander
Graham Bell's telephone patents for $100,000, their highest-profit
market was long-distance telegraphy. Telephones were only useful for
very local calls. Short-distance telegraphy barely existed as a market
segment, if at all. So Western Union's decision was quite understandable
at the time. |
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Paper
is significantly cheaper than parchment, and got its great breakthrough
with the printing
press. Parchment is stronger, more durable, and still used until
today for diplomas and other high-value documents. |
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By
the beginning of the 20th century, rail (including streetcars)
was the fastest and most cost-efficient means of land transportation for
goods and passengers in industrialized countries. The first cars, buses
and trucks were used for local transportation in suburban
areas, where they often replaced streetcars and industrial tracks. As
highways expanded, medium- and later long-distance transports were
relocated to road traffic, and some railways closed down. As rail
traffic has a lower ton-kilometer
cost, but a higher investment and operating cost than road traffic, rail
is still preferred for large-scale bulk cargo (such as minerals). Since
rail has always been faster than contemporary road vehicles, it is
viable for passengers in populated regions like Western Europe, south
and east Asia and the Northeast
Corridor. When urban density increases, rail systems often become
more attractive, and make a comeback. |
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Aircraft
were once a revolutionary technology that replaced trans-continental
rail traffic, and became a serious competitor even on medium range (500 km
and more). Today, as airlines are burdened by increasing fuel costs and
tightened airport
security, and train speed increases with new infrastructure, trains
in Europe and Asia are disrupting short-range flights. Future trains
could be competitive on trans-continental distance too. |
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Private
jet |
The
Concorde
has so far been the only supersonic airliner in extensive commercial
traffic. However, it catered to a small customer segment, which could
later afford small private sub-sonic jets. The loss of speed was
compensated by flexibility. The Concorde was withdrawn in 2003. |
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Offset
printing has a high overhead
cost, but very low unit
cost compared to computer printers, and superior quality. But as
printers, especially laser
printers, have improved in speed and quality, they have become
increasingly useful for creating documents in limited issues. |
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Metal,
wood, glass etc |
Bakelite
and other early plastics had very limited use - their main advantages
were electric insulation and low cost. New forms had advantages such as
transparency, elasticity and combustibility. In the early 21st century,
plastics can be used for nearly all household items previously made of
metal, wood and glass. |
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Missile
weapons |
Early
missile weapons, like Congreve
rockets, were unreliable, and more or less experimental. They
however had some intrinsic advantages - no recoil, and smaller launcher
units. Guidance systems made missiles more efficient, and made most
artillery pieces obsolete on land, at sea and in the air. Artillery
still has the advantage of cheaper ammunition and greater accuracy, but
modern warships rely entirely on missiles for long-range combat. |
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The
first television channels mainly aired news, and began to replace newsreels.
As television featured soap
operas, animated shorts and other low-budget drama, demand for B
movies declined, and concentrated on feature
films with high budget. Pornography
is another genre which has gradually moved from the silver screen to
home television, as video recorders appeared (mostly since home systems
offer more privacy than theaters). Cable and digital encoding has
increased the range of television programs. Multiplexes
increased cinema's range, at the cost of nearness. Currently, the
budgets of Hollywood TV series are closing up on the budgets of feature
films. Also, since audio-visual performance of television sets has
improved more than movie theaters (as cinema technologies such as
Cinemascope, 3D cinema, IMAX, THX have had limited commercial success),
the box
office mainly survives from the artificial time gap between cinema
openings and DVD releases, together with snack sales. |
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An
LED is significantly smaller and less power-consuming than a light bulb.
The first optical LEDs were weak, and only useful as indicator
lights. Later models could be used for indoor
lighting, and current ones are strong enough to serve as street
lights. Classical light bulbs remain since they fit to existing
light fixtures. |
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Synthesizers
were initially low-cost, low-weight alternatives to electronic organs
and acoustic pianos. Today's synthesizers feature many automatized
functions, and have replaced them for home and hobby users. |
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Downloadable
Digital
Media |
In
the 1990s, the music
industry phased out the single.
This left consumers with no means to purchase individual songs. This
market was filled by filesharing
technologies, which were initially free, and then by inexpensive online
retailers such as the iTunes
music store. This low end disruption eventually undermined the sales
of physical CDs.[6] |
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VoIP
technology over a wifi network, can cost next to nothing for the user
and the network used in data traffic on a unit basis; compared to the
standard GSM network, especially for roaming calls. Where GSM providers would charge what is widely considered ludicrous
pricing for services such as calling international countries, installing
a small application on compatible mobile phones, can cost the user
nothing. However, this service cannot replace GSM fully, since it relies
in the ever expanding wifi enabled areas. |
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Flexible word processors with high-quality printers
have superseded typewriters in all but the simplest applications, or
where electrical power is not available, and manual equipment is the
only practical alternative to pens and pencils. |
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Liquid crystal displays (LCD) (and other planar
technologies) have largely replaced the dominant cathode ray tube (CRT)
technology for computer displays and television sets, although CRT
technologies have improved with advances like true-flat panels and
digital controls only recently. |
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Mobile Discount / No Frills Operators (MDOs aka.
MVNOs) first focused on a low-distribution-cost-through-internet sales
model. In later times, innovations like low-priced mobile-internet
tariffs were brought to market. This tripped the development of a new
discount category in the market which was later entered by the large
discount retail chains with own branded offerings leveraging their
distribution power in the lower tier of the market. |
Examples of revolutionary innovations
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Revolutionary
innovation |
Displaced
or Marginalized technology |
Notes |
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Revolutionary
innovation. Not a disruptive innovation as pastoralism is a much more
productive technology than hunting. The development of food production
technology led to other disruptive technologies such as cities,
writing, metal working, wheeled vehicles, and much of the remainder of
world civilization. |
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In
addition to efficiency these also provide a great reduction in
opportunities for pilferage and integrate well with both rail and
truck transport. |
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A
revolutionary innovation often falsely quoted as a disruptive
technology. Systems built up with semiconductors require far less
energy, are magnitudes of size smaller and more reliable than such
with tubes. Semiconductor transistors revolutionized logic circuits
upon its introduction by Shockley
and Bardeen
in the 1950s. |
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Horses
as transport |
See
Buggy
whip; feed suppliers, harness makers, horse breeders, etc also
affected |
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Road,
rail and sea transport |
Airliners
offer unmatched speed, and quickly came to dominate inter-continental
and trans-continental travel. They are however facing competition from
high-speed rail (see above). |
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This
revolution depends as well on cheap
oil and a big amount of government investment in road
infrastructure. As well the environmental
cost of Air
pollution of often small amounts of products are socialized and
not paid privately by the parties interested in the transport. |
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Not all technologies promoted
as disruptive innovations have actually prospered as well as their proponents
had hoped. However, some of these technologies have only been around for a few
years, and their ultimate fate has not yet been determined.
Unresolved examples of
technologies promoted as 'disruptive innovations'
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ebooks vs. paper books as well as other content distribution by download (video games, films etc) instead of physical storage media (DVDs).
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VoIP (and VoIP over 802.11) vs. traditional telephone and mobile phone service.
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Webcam videoconferencing as a lower-quality but quicker, cheaper and easier alternative to high-end videoconferences with dedicated monitors and office space.
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Reconfigurable Computing as part of a dual paradigm approach to High Performance Computing vs. traditional computing exclusively based on the von Neumann machine paradigm.
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Web TV versus broadcast television.
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Free/open source software vs proprietary software.
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Artificial Photosynthesis vs Biomass production to counter global warming induced by fossil fuel combustion.
Business implications
Disruptive technologies are not
always disruptive to customers, and often take a long time before they are
significantly disruptive to established companies. They are often difficult to
recognize. Indeed, as Christensen points out and studies have shown, it is
often entirely rational for incumbent companies to ignore disruptive
innovations, since they compare so badly with existing technologies or
products, and the deceptively small market available for a disruptive
innovation is often very small compared to the market for the established
technology.
Even if a disruptive innovation
is recognized, existing businesses are often reluctant to take advantage of
it, since it would involve competing with their existing (and more profitable)
technological approach. Christensen recommends that existing firms watch for
these innovations, invest in small firms that might adopt these innovations,
and continue to push technological demands in their core market so that
performance stays above what disruptive technologies can achieve.
Disruptive technologies, too,
can be subtly disruptive, rather than prominently so. Examples include digital
photography (the sharp decline in consumer demand for common 35 mm print
film has had a deleterious effect on free-riders such as slide and infrared
film stocks, which are now more expensive to produce) and IP/Internet
telephony, where the replacement technology does not, and sometimes cannot
practically replace all of the non-obvious attributes of the older system
(sustained operation through municipal power outages, national security
priority access, the higher degree of obviousness that the service may be
life-safety critical or deserving of higher restoration priority in
catastrophes, etc).
See also
|
|
Wikiversity has
learning materials about Disruptive
technology |
- Law
of disruption
- Entrenched
Player's Dilemma
- List
of emerging technologies
- Paradigm
shift
- Innovation
Saturation
- Technology
strategy
- Disruptive
Technology Office
- Category
killer
- Free
energy suppression
- Obsolescence
- The
Man in the White Suit
- Leapfrogging
Notes
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^ a b Christensen 2003, pp. xviii. Christensen describes as "revolutionary" innovations as "discontinuous" "sustaining innovations".
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^ Bower, Joseph L. & Christensen, Clayton M. (1995). "Disruptive Technologies: Catching the Wave" Harvard Business Review, January-February 1995
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^ Christensen, Clayton M.;Raynor, Michael E. (2003). The Innovator's Solution. Harvard Business School Press. ISBN 1-57851-852-0.
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^ Knopper, Steve (2009), Appetite for self-destruction : the spectacular crash of the record industry in the digital age, New York: Free Press, ISBN 1416552154
References
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Anthony, Scott D., Johnson, Mark W., Sinfield, Joseph V., Altman, Elizabeth J. (2008). Innovator's Guide to Growth - Putting Disruptive Innovation to Work - Foreword by Clayton M. Christensen. Harvard Business School Press. ISBN 13-9781591398462.
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How to Identify and Build Disruptive New Businesses, MIT Sloan Management Review Spring 2002
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Christensen, Clayton M., Anthony, Scott D., & Roth, Erik A. (2004). Seeing What's Next. Harvard Business School Press. ISBN 1-59139-185-7.
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Christensen, Clayton M. & Overdorf, Michael. (2000). "Meeting the Challenge of Disruptive Change" Harvard Business Review, March-April 2000.
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Christensen, Clayton M., Bohmer, Richard, & Kenagy, John. (2000). "Will Disruptive Innovations Cure Health Care?" Harvard Business Review, September 2000.
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Christensen, Clayton M. (2003), The innovator's dilemma : the revolutionary book that will change the way you do business, New York: HarperCollins, ISBN 0-06-052199-6
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Christensen, Clayton M., Baumann, Heiner, Ruggles, Rudy, & Sadtler, Thomas M. (2006). "Disruptive Innovation for Social Change" Harvard Business Review, December 2006.
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Mountain, Darryl R., Could New Technologies Cause Great Law Firms to Fail?
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Mountain, Darryl R. (2006). Disrupting conventional law firm business models using document assembly, International Journal of Law and Information Technology 2006; doi: 10.1093/ijlit/eal019
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Tushman, M.L. & Anderson, P. (1986). Technological Discontinuities and Organizational Environments. Administrative Science Quarterly 31: 439-465.
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Eric Chaniot (2007). "The Red Pill of Technology Innovation" Red Pill, October 2007.
Additional Readings
-
Danneels, Erwin (2006), “From the Guest Editor: Dialogue on The Effects of Disruptive Technology on Firms and Industries,” Journal of Product Innovation Management, 23 (1): 2-4
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Danneels, Erwin (2004), “Disruptive Technology Reconsidered: A Critique and Research Agenda,” Journal of Product Innovation Management, 21 (4): 246-258
External links
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The Importance of Disruptive Technologies. Disruptive technologies emerge from the chaos that surrounds us and the best thing we could do is to create an environment which stimulates these technologies to come to the fore. We, including our leaders in business and society at large, have to be tolerant of chaos and build strategic capability to solve problems of the future rather than concentrating on today.
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The Myth of Disruptive Technologies. Note that Dvorák's definition of disruptive technology describes the low cost disruption model, above. He reveals the overuse of the term and shows how many disruptive technologies are not truly disruptive.
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"The Disruptive Potential of Game Technologies: Lessons Learned from its Impact on the Military Simulation Industry", by Roger Smith in Research Technology Management (September/October 2006)
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Disruptive Technology at The Economist: The blood of incumbents
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Bibliography of Christensen’s "Theory of Disruptive Innovation" as it relates to higher education
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Disruptive Technology Portfolio by InformationWeek and Credit Suisse
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