What do you mean by the term disruptive technology?

Another great question!

Disruptive Technology is a term popularized by Harvard Business School professor Clayton Christensen in his book The Innovator's Dilemma.

Christensen believes that the main reason that successful and apparently well-run and well established organizations loose market share, and sometimes go out of business, is that they fail to recognize the distinction between sustaining and disruptive technologies. 

Disruptive and Sustaining Technologies

Sustaining technologies improve the performance of established products.  They are usually developed by successful and well established companies who are often seen as holding a leadership position in their industries.

Adding a new feature to a MIG welder would be an example of a sustaining technology.

Disruptive technologies have features that a few fringe (and generally new) customers value.  Products based on disruptive technologies are typically cheaper to produce, simpler, smaller, better performing, and, frequently, more convenient to use.

The transistor, compared to the vacuum tubes that it subsequently replaced, is an example of this sort of technology. The ZENA mobile welding system is another!

ZENA's new technology, engine driven, DC stick welders are superior to conventional engine driven welders. In addition to better performance and reliability, major innovations and advances in technology, such as ours, almost always result in reductions in the size, and the cost, of the resulting products:

Disruptive Technology may (initially) be rejected by conventional distribution channels (Click Here for more on this)

• Disruptive technology products are typically simpler, more reliable, and cheaper to mass produce -- yet also typically out perform products based on traditional technologies. They offer a fantastic value to the retail purchaser, when compared to existing, more expensive to produce, established technology.
• Disruptive technology products generally promise retailers and distributors lower margins, not greater profits. (30% of $500 is much less than 30% of $3,000.)
• Disruptive technology products, therefore, are usually first sold in what the established manufacturer's consider emerging or insignificant markets. (Who ever heard of welders built into 4x4's, tractors, military vehicles, small service vehicles, boats, etc.?) 
• The established manufacturer's largest and most profitable customers (in the welding industry, this would be large welding equipment distributors, mass merchants, etc.) generally don't want, and indeed initially aren't set up to sell or support, products based on disruptive technologies. 

Then, how are disruptive technology products sold?

A disruptive technology is initially embraced by the least profitable (and usually the least wealthy) customers in a market.  For example, in the welding field this sort of customer would include:

• Working farmers all over the world (including farmers in developing nations)
• Professional welders and others who usually by used welding equipment
• Companies and individuals who need a commercial duty welders but who simply cannot afford and or justify the expense of the equipment that would do the job
• Lumbermen
• People operating 4x4's and other equipment and/or vehicles in remote or difficult to reach areas

It pays to invest in disruptive technology products

Christensen goes on to suggest that the refusal by successful and established companies or distributors to fully embrace disruptive technologies can lead to a sudden loss of dominance in their respective fields, if not their total disappearance. 

Sources:

• Christensen, Clayton M. The Innovator's Dilemma: When New Technologies Cause Great Firms to Fail. Harvard Business School Press, June 1997.
• Christensen, Clayton M. "Disruptive Technology," Bloomberg Personal Finance, October 1999.
• Walter Archer, D. R. Garrison, T. D. Anderson. Adopting Disruptive Technologies in Traditional Universities: Continuing Education as an Incubator for Innovation. University of Alberta, 2000.

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