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The New Disrupters
Article

The New Disrupters

By entering the market with products and services that are every bit as good as those offered by legacy companies, a new breed of disrupters is making it harder than ever for traditional businesses to compete.

Rita Gunther McGrath
MIT Sloan Management Review, 2020
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7

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Recommendation

Today’s disruptive start-up companies take advantage of digital technologies to offer quality products at lower costs. Using digital platforms to market directly to consumers, these newcomers bring their products to market quickly and put pressure on legacy companies more rapidly than in the past. Consumers, for their part, appreciate the easy access, convenience, 24/7 support and favorable return policies. Rita Gunther McGrath, a professor of management at Columbia Business School, urges traditional companies to understand and adopt the practices of the digital competition.

Summary

Digital disrupters threaten traditional competitive advantages.

Established companies likely fail to recognize start-ups that are marketing cheaper, innovative products, as Clayton Christensen explained in the mid-1990s with his theory of disruptive innovation. Overly focused on serving an existing customer segment and on improving on specific features, traditionalists risk losing their competitive advantage as the newcomers’ products improve and win new customers.

Intel, for example, dominated the computer chip market for decades. However, Intel focused on improving performance while failing to realize that mobile technology required less powerful chips that put less strain on battery life. That oversight...

About the Author

Rita Gunther McGrath is a professor at Columbia Business School and an expert on strategy, management and innovation in uncertain and volatile environments.

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