The technological development relentless pace and the almost unlimited access to information are transforming the way organizations do business. The Internet in combination with new technologies has completely revolutionized the conditions in which organizations interact with customers and stakeholders.
It is important for organization to differentiate sustaining and disruptive innovations and better understand the advantages that both have to not oversupply what customers demand. Incumbent organizations highly rely on their mainstream customers to survive; all their internal and external activities are designed to provide sustaining products and/or services to their mainstream customers.
Incumbent organizations allocate resources to projects that are expected to generate high revenues and ignore or eliminate projects whose markets and customers do not even exist. The latter are projects that normally generate very low revenues and are designed to provide products and services to low-end markets. This is risky because new entrants are actually taking advantage of this gap leaving incumbent organization unavailable to move away from their value networks, business models, etc.
Disruptive innovations create new markets and attract new customers and eventually new entrants experience moving upmarket where their products/services actually meet mainstream customers’ demands. Disruptive innovations bring to the markets a very different value proposition. These new markets demand specific value networks and tailored business models for organizations to succeed.
Business models are very powerful tools to capture value. Effective business models can help organizations to succeed by commercializing a technology rejected by other leading companies. In some situations an innovation can employ a business model familiar to an organization. In other situations, that familiar business model will not fit the circumstance of the technological or market opportunity (Chesbrough and Rosenbloom).
|Educations||MSc in International Business and Politics, (Graduate Programme) Final Thesis|
|Number of pages||64|