disruptive innovation

Disruptive innovation describes a process where a smaller company with fewer resources successfully challenges established businesses.

The disruption typically starts at the bottom of a market—offering simpler, cheaper alternatives that incumbents ignore—then moves upmarket as the technology improves.

The term was coined by Clayton Christensen and has become business jargon for any significant technological change, though purists insist true disruption follows a specific pattern: Netflix didn't just compete with Blockbuster; it was a disruptive innovation that made video rental stores obsolete.