Disruptive innovation

Definition

Disruptive innovation refers to a process where a smaller company with fewer resources successfully challenges established businesses, often leading to the creation of new markets or the transformation of existing ones. This type of innovation typically starts by targeting overlooked segments of the market, gradually moving up to challenge more established players. In hospitality and tourism, this concept is critical as it highlights how new business models and technologies can change consumer behavior and expectations, forcing traditional services to adapt or become obsolete.

5 Must Know Facts For Your Next Test

1. Disruptive innovation often begins with simple products that may initially appear inferior compared to existing solutions but eventually improve and capture more market share.
2. Technology-driven platforms like Airbnb and Uber are prime examples of disruptive innovation in the hospitality and travel sectors, fundamentally changing how consumers book accommodations and transportation.
3. Disruptive innovations tend to create new markets rather than competing directly in existing ones, making them challenging for established businesses to recognize until it's too late.
4. The success of disruptive innovation can force traditional businesses to innovate or adapt their strategies significantly to remain relevant in an evolving market landscape.
5. Understanding disruptive innovation is vital for hospitality and tourism businesses as it can influence strategic planning, customer engagement, and competitive positioning.

Review Questions

• How does disruptive innovation differ from sustaining innovation in the context of hospitality and tourism?
  • Disruptive innovation focuses on creating new markets by appealing to underserved customers or introducing simpler, more affordable options, while sustaining innovation seeks to enhance existing products or services that current customers already value. In hospitality and tourism, disruptive innovations like online booking platforms have changed consumer expectations and business models, whereas sustaining innovations might involve improving luxury hotel amenities or enhancing customer service experiences.
• Discuss the impact of technology-driven disruptive innovations on traditional hospitality businesses.
  • Technology-driven disruptive innovations have significantly impacted traditional hospitality businesses by introducing new models that challenge their long-standing practices. For example, companies like Airbnb have created a new category of lodging that offers unique experiences at competitive prices. This has forced traditional hotels to rethink their offerings, improve their services, and sometimes adopt similar technologies to stay competitive in a rapidly evolving landscape.
• Evaluate the long-term implications of disruptive innovation for the future of hospitality and travel industries.
  • The long-term implications of disruptive innovation for the hospitality and travel industries include the potential for continuous transformation as new entrants redefine market standards. Companies must stay agile and responsive to shifting consumer preferences driven by these innovations. Additionally, this may lead to a greater focus on personalized experiences and technology integration, pushing traditional businesses to innovate constantly or risk obsolescence in an industry where adaptability is crucial for survival.

Related terms

Sustaining Innovation: Innovation that improves existing products or services in ways that mainstream customers have historically valued.

Business Model Innovation: The process of designing or transforming a company's model for creating, delivering, and capturing value.

Market Penetration: The strategy of increasing market share for a product or service within existing markets, often through competitive pricing or enhanced services.