Disruptive Innovation

Innovation distance explains why so many of those who turn an industry upside down are outsiders, even outcasts. To understand this point we need to grasp the difference between the two types of innovation. Sustaining innovations are improvements that make the product better, but do not threaten its market. The disruptive innovation, conversely, threatens to displace a product altogether. It is the difference between the electric typewriter, which improved on the typewriter, and the word processor, which supplanted it.

Another advantage of the outside inventor is less a matter of the imagination than of his being a disinterested party. Distance creates a freedom to develop inventions that might challenge or even destroy the business model of the dominant industry. The outsider is often the only one who can afford to scuttle a perfectly sound ship, to propose an industry that might challenge the business establishment or suggest a whole new business model. Those closer to - often at the trough of - existing industries face a remarkable constant pressure not to invent things that will ruin their employer. The outsider has nothing to lose. But to be clear, it is not mere distance, but the right distance that matters; there is such a thing as being to far away.

Tim Wu, The Master Switch