The Innovator's Manifesto

What Is “Disruption Theory?”

Disruption theory explains how innovations triumph and how they displace existing market leaders. To understand how it works, it helps to know that a market theory can be “explanatory” and describe why something happens, or it can be “predictive” and try to forecast what will happen, even without making any particular claims about being true. You cannot test an explanatory theory since it is designed to “address a fixed and unchanging past.” But you can test a predictive theory by using experimentation. You define a situation, predict an outcome and follow the results. You can strictly control this process, as in a physics lab, or just observe it, perhaps by watching as a new business either succeeds or fails in a given market.

Disruption theory offers more accurate than you might expect “predictive power” about which new businesses may work and which ones may not. This theory can help entrepreneurs hone their plans, investors guide their buys, executives select acquisition targets and managers assess potentially disruptive outside innovation.

Corporate strategists can apply disruption theory without extensive research into other ...