A disruptive technology is an innovation which creates a new market or value network and eventually goes on to disrupt an existing market or network.
The concept of ‘disruptive technology’ (or ‘disruptive innovation’, since it can consist of business models too) was invented by Clayton Christensen in his 1997 book The Innovator’s Dilemma.
Christensen focused on innovations that break the usual pattern of companies producing higher-spec products at a higher price (he called these conventional advances ‘sustaining technologies’). Disruptive technologies, at least in their early years, typically offer poorer performance than established technologies but are cheaper and provide customer benefits not offered (or even considered) by the existing market leaders. The disruptive technology quickly improves in quality and replaces older technologies.
The leading companies in the industry either miss these developments, or fail to see that the performance of the new technology will improve rapidly or, even if they understand all this, are unable to retool their business quickly enough because of institutional inertia.
Examples of Disruptive Technologies in the Context of Today’s World are – Google’s Core Search [Replaced the Big Directories], Big Data & Cloud Computing, fully automated driving, healthcare advances in stem cells and bio-similars are few that come to our mind.