There are sustaining innovations and there are disruptive innovations. A sustaining innovation tends to be an incremental improvement on current products or services and doesn’t affect existing markets. A disruptive innovation, however, displaces existing products or services and changes existing markets.
All of us have experienced disruptive technologies. When I was a kid, I took pictures on 35mm films and developed them in a darkroom myself. Two years ago on Sandia Peak in Albuquerque, New Mexico, I was surprised to meet a guy who was still using a 35mm film camera. But the market nowadays is dominated by digital cameras. An example of disruptive innovation in IT was the displacement of 8-inch floppy disks by 5.25-inchfloppy disks, and then by 3.5-inch floppy disks.
The floppy disks have since been disrupted by CDs, DVDs, and USB drives. As a result of these disruptions, some companies have prospered while others have fallen behind.